In a significant boost to India’s macroeconomic outlook, retail inflation eased to a five-and-a-half-year low of 3.34% in March 2025, down from 3.61% in February. The moderation in inflation has been largely driven by falling food prices, marking a welcome relief for millions of households amid broader efforts to stabilize the economy. According to data released by the Ministry of Statistics and Programme Implementation, key food items such as vegetables, pulses, and eggs witnessed notable deflation. Vegetable prices dropped 7% for the second consecutive month, with tomatoes leading the way with a steep 35% fall. Even previously inflated staples like potatoes and onions saw a sharp deceleration in price hikes. The fall of the retail inflation is an appreciable work of the current Indian dispensation.
Food inflation, as measured by the Consumer Food Price Index (CFPI), fell to a three-year low of 2.7% in March, compared to 3.75% in February. Pulse prices declined by 2.7%, and egg prices fell over 3%. Though rice and wheat prices rose by 4.9% and 9% respectively, they were still below the previous month’s rates. The easing of inflation also aligns with recent monetary policy decisions by the Reserve Bank of India (RBI), which cut the repo rate twice by 25 basis points each. These rate cuts signal the central bank’s focus on boosting growth, and the latest CPI data further cements its stance.
“The softer than expected CPI will provide further comfort to the RBI to continue prioritising growth,” said Upasna Bharadwaj, Chief Economist at Kotak Mahindra Bank, predicting that the terminal repo rate could settle around 5–5.25% in the coming quarters. Fuel and light inflation rose slightly to 1.48%, marking the first increase since September 2023, though it remains at manageable levels. Meanwhile, core inflation (excluding food and fuel) continues to show persistent pressure, particularly in household services.
Rural inflation slowed significantly to 3.25%, down from 3.79% in February, while urban inflation inched up slightly to 3.43%. Among states, Kerala registered the highest inflation at 6.6%, followed by Maharashtra, Tamil Nadu, Karnataka, and Assam. Delhi and Telangana posted the lowest inflation at 1.5% and 1.1% respectively. Wholesale inflation, tracked by the Wholesale Price Index (WPI), also mirrored the downward trend, easing to 2.05% in March from 2.38% in February. The moderation was widespread, with primary articles and fuel prices showing subdued movement.
Notably, the inflation trend reflects the current government’s sustained focus on fiscal discipline and agricultural supply-chain interventions. Strategic imports, effective stock monitoring, and timely release of food reserves appear to have helped cool prices. These actions, combined with measured monetary policy support, reflect a pragmatic approach to balancing growth and inflation control. Experts now believe that inflation is likely to remain under 4% in the near term, setting the stage for further rate cuts. “If inflation continues on this path, we may see a 50 basis points cut soon, which will support both consumption and investment,” said Vivek Rathi, Research Director at Knight Frank India. As global economies continue to battle uncertainty, India’s inflation management stands out as a testament to coordinated economic governance and prudent policy execution.
