India's March retail inflation eases to 5.66%, lowest since December 2021

According to govt data, urban inflation in March was 5.89%, while rural inflation was 5.51%

India's retail inflation eased to 5.66 per cent in March, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed on Wednesday. This is the lowest since December 2021, when retail inflation was 5.66 per cent. The urban inflation was 5.89 per cent, and the rural was 5.51 per cent. The inflation in the same month last year was 6.95 per cent. 

In February, India's retail inflation stood at 6.44 per cent. 

A Reuters poll had earlier said that India's retail inflation eased in March to 5.8 per cent owing to softer food price rises, dipping below the Reserve Bank of India's upper tolerance limit for the first time this year. It said that food inflation, which accounts for nearly half of the overall consumer price basket, was expected to have moderated due to falling vegetable prices, partially offset by surging cereal prices.

After staying below 6 per cent for two months (November and December 2022), the retail inflation rose above it in January 2023, when it stood at 6.52 per cent.

The Reserve Bank of India's (RBI) monetary policy committee (MPC) is required to keep retail inflation at 4 per cent with a lower tolerance limit of 2 per cent and an upper limit of 6 per cent. It controls the money supply in the economy through the repo rate. 

Since May last year, the MPC has hiked the repo rate by 250 basis points (bps), but it pushed the pause button in the latest policy announcement. On April 6, RBI governor Shaktikanta Das said that MPC has decided to watch the impact of previous rate hikes before going for another hike.