India’s retail inflation, as measured by the consumer price index (CPI), decreased to 5.66% in March 2023 from 6.44% the previous month, owing mostly to lower food costs.
The current inflation figure is within the Reserve Bank of India’s comfort zone.
According to data issued on Wednesday by the Ministry of Statistics and Programme Implementation (MoSPI), food inflation in March 2023 fell to 4.79% from 5.95% the previous month.
After exceeding the upper tolerance barrier in January-February 2023, March inflation has returned to the RBI’s target range of 2-6%.
On April 6, the RBI’s monetary policy committee (MPC) unanimously resolved to hold the policy repo rate steady at 6.5%.
Market participants and policymakers saw the decision as encouraging, given that the central bank has been hiking the repo rate for the last year in its fight against inflation. Borrowers’ loan EMIs have risen as a result of a series of repo rate rises.
In the 11 months since May 2022, the RBI has raised the policy repo rate by a total of 250 basis points, or 2.5%.
Taking into account numerous variables and assuming an annual average crude oil price (Indian basket) of US$ 85 per barrel and a typical monsoon, the central bank has predicted CPI inflation of 5.2% for 2023–24, with 5.1% in Q1, 5.4% in Q2, 5.4% in Q3, and 5.2% in Q4.
