India / Retail inflation drops to 5.91% in March, lowest in four months

New Delhi: Prices of household items in the month of March grew at a 4-month low pace of 5.9 per cent. The CPI inflation has returned to RBI’s comfort zone of less than 6 per cent, after four months. In February, the retail inflation grew at 6.58 per cent, according to the Ministry of Statistics and Programme Implementation (MOSPI). The food inflation growth also fell from 10.81 per cent in February to 8.76 per cent in March 2020. However, the prices of vegetables, pulses and its products have risen by more than 15 per cent in the month of March. Prices of meat and fish, and spices also rose sharply. The retail inflation grew quickest in the two states of Telangana and Uttar Pradesh. In these states, CPI grew at more than 7.8 per cent, exceeding the national average by a significant margin.

Retail inflation in the country is expected to remain below the RBI’s benchmark of 4 per cent in the current year.  This has also given an opportunity to the RBI MPC to provide more relief measures in order to restore confidence of producers, consumers, investors, and savers amid coronavirus scare. As a consequence of COVID-19, aggregate demand may weaken and ease core inflation further while heightened volatility in financial markets could also have a bearing on inflation, RBI said.

However, the unseasonal rains, if any, and COVID-19 related supply-side disruptions in the food sector pose an upside risk to the inflation trajectory in the current fiscal. Meanwhile, the exact outlook for inflation is still uncertain. “The impact of COVID-19 on inflation is ambiguous, with a possible decline in food prices likely to be offset by potential cost-push increases in prices of non-food items due to supply disruptions,” RBI said in its April’s Monetary Policy report.