Retail inflation hits 67-month low at 3.34% in March on cooling food prices

Consumer Price Index (CPI) inflation cooled to 3.34% in March 2025, marking the lowest level in 67 months, primarily due to a steep decline in food inflation. The Food & Beverages category saw inflation ease by 95 basis points month-on-month, settling at 2.88%, largely driven by continued deflation in vegetable prices. The vegetable inflation rate deepened further into negative territory, dropping to -7.04% in March.

On the flip side, fruits inflation remained elevated, inching up slightly to 16.27%. The fuel and light category, which had been in deflation for 18 months, finally turned positive in March at 1.48%.

For the fiscal year, CPI inflation averaged 4.63% in FY25, down from 5.36% in FY24 and 6.66% in FY23, reflecting a clear disinflationary trend. Analysts now expect FY26 CPI inflation to average around 3.9%.

“The significant decline in headline inflation and food inflation during the month of March is mainly attributed to decline in inflation of Vegetables, Eggs, Pulses & products, Meat & fish, Cereals & Products and Milk & products,” a statement by the Statistic Ministry said.

Core inflation (excluding food and fuel) saw an uptick to 4.1% in March, the highest in 15 months, driven largely by rising gold prices, considered a safe haven during global uncertainty. However, when gold is excluded, core inflation stands at 3.2%, below both overall and core CPI, suggesting broader price stability outside commodity-driven spikes.

"CPI inflation moderated to a 67-month low of 3.34% in Mar’25 due to a sharp correction in food inflation. Vegetable CPI, which slid into negative territory in the previous month, further receded to - 7.04% in March month. Fruit inflation is still at an elevated level and inched up slightly in March to 16.27%. With the latest print, the annual CPI for FY25 came at 4.63% as againstthe  average CPI of 5.36% in FY24 and 6.66% in FY23. We expect average CPI inflation for FY26 in the range of 3.8-3.9%," SBI research noted in its report.