India’s retail inflation eased to a six-year low of 3.34% in March 2025, primarily due to falling prices of vegetables and protein-rich food items, as per the latest data released by the government. This marks a slight decline from 3.61% recorded in February 2025, and a notable drop from 4.85% in March 2024, indicating a positive shift for household budgets and consumer purchasing power.
Retail inflation, measured by the Consumer Price Index (CPI), reflects the average change in prices paid by consumers for goods and services. The current rate is the lowest since August 2019, when CPI inflation stood at 3.28%.
Food inflation, a major component of retail inflation, dropped significantly to 2.69% in March, down from 3.75% in February and a sharp fall from 8.52% in the same month last year. This easing trend in food prices played a critical role in the overall decline.
In response to the declining inflation, the Reserve Bank of India (RBI) recently lowered the repo rate by 25 basis points. The RBI has projected an average CPI inflation of 4% for the 2025–26 financial year, with quarterly estimates ranging between 3.6% and 4.4%.
Meanwhile, wholesale inflation also showed signs of cooling, reaching 2.05% in March, its lowest level in six months. This is a decrease from 2.38% in February, and a significant increase from just 0.26% in March 2024, driven mainly by easing prices of vegetables and staples like potatoes.
The dip in both retail and wholesale inflation is seen as a positive sign for the Indian economy, potentially supporting economic growth while giving policymakers more flexibility to manage interest rates moving forward.
