Retail inflation as measured by the consumer price index (CPI) came in lower at 5.17 per cent in March, reinforcing the view that further monetary easing by the RBI is imminent.

The latest CPI print was lower than both the February 2015 level of 5.37 per cent and March 2014 level of 8.25 per cent.

The fall was broad-based and driven by a downward slide in food inflation — it has nearly 50 per cent weightage in the CPI — to 6.14 per cent in March 2015 from 6.88 per cent in the previous month.

At its recent monetary policy review, the Reserve Bank of India had said it expected the CPI to come down to about 4 per cent before starting to go back to its 6 per cent target for January 2016.

Commenting on the CPI data for March 2015, Chandrajit Banerjee, CII Director-General, said inflation continues to remain moderate and has in fact declined compared with the previous month.

This should persuade the RBI to resume its rate easing cycle to support growth without being too concerned about the impact on inflation, he said.

Anis Chakravarty, Senior Director, Deloitte in India, said that the decline in retail inflation during the last month (March) was a positive development.

Core inflation remained stable at 3.9 per cent, which probably shows that demand pressures still remain subdued, giving the RBI more confidence, he said.

“Overall, the internals showed a more positive picture as services inflation captured by the miscellaneous component and housing remained soft. We continue to expect rate cuts possibly to the tune of 50 bps in the coming months,” he said.

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