Driven primarily by the softening of food prices, India’s retail inflation measured by consumer price index (CPI) fell to 5.66% in March 2023 from 6.44% in the previous month.
The latest inflation number is within the comfort zone of Reserve Bank of India (RBI)
Data released by the Ministry of Statistics and Programme Implementation (MoSPI) on Wednesday showed food inflation in March 2023 declined to 4.79% from 5.95% in the previous month.
After breaching the upper tolerance threshold during January-February 2023, the March inflation print has come back to the RBI’s target band of 2-6%.
Hitting the pause button, the RBI’s monetary policy committee (MPC) on April 6 voted unanimously for keeping the policy repo rate unchanged at 6.5%.
The market operators and policy-watchers termed the move as positive as the central bank had been raising the repo rate over the last one year in its war against inflation. The series of hikes in repo rate pushed up loan EMIs for borrowers.
The RBI has increased the policy repo rate cumulatively by 250 basis points or 2.5% in the last 11 months starting May 2022.
Considering various factors and assuming an annual average crude oil price (Indian basket) of US$ 85 per barrel and a normal monsoon, the central bank has projected CPI inflation at 5.2 per cent for 2023-24; with Q1 at 5.1%; Q2 at 5.4%; Q3 at 5.4%; and Q4 at 5.2%.