Retail inflation based on the Consumer Price Index (CPI) is likely to have closed fiscal year 2024-25 between 3.8 per cent and 4 per cent in March. The official data will be released on Tuesday.
Vegetable prices have shown a mixed trend, while gold prices continue to rise. This suggests that food inflation is expected to remain flat, but core inflation (headline inflation excluding food and fuel) may witness an uptick.
Still, headline inflation is expected to hover around 4 per cent — the median of the targeted inflation range of 2 to 6 per cent. This provides comfort to the Monetary Policy Committee as it reviews the policy interest rate, commonly known as the repo rate (the rate at which the Reserve Bank of India lends to scheduled commercial banks), especially after two successive cuts.
The year-on-year (y-o-y) inflation rate based on the All-India Consumer Price Index (CPI) for February 2025, compared to February 2024, was 3.61 per cent. This marked a decline of 65 basis points in headline inflation from January 2025, making it the lowest y-o-y inflation rate since July 2024.
Similarly, food inflation for February 2025 stood at 3.75 per cent compared to February 2024. A sharp decline of 222 basis points was observed in food inflation between January and February 2025. The February 2025 food inflation figure was the lowest since May 2023.
D K Srivastava, Chief Policy Advisor at EY India, expects this trend to continue in March. “The average for January and February was 3.9 per cent, and for the quarter (January-March), it is going to be below 4 per cent,” he said.
A report by CRISIL highlights a divergent trend in TOP (Tomato, Onion, and Potato) prices during March. Tomato prices declined 34 per cent y-o-y to ₹21/kg in March 2025, down from ₹32/kg in March 2024. This drop was driven by a 29 per cent increase in tomato arrivals across the country, particularly in the southern States, which saw a robust rabi crop due to increased acreage and better yields amid healthy reservoir levels.
In contrast, potato and onion prices rose by 2 per cent and 6 per cent, respectively. Meanwhile, overall vegetable prices increased by 19 per cent. These trends are expected to impact both food and headline inflation numbers.
Aditi Nayar, Chief Economist at ICRA, believes that the sequential uptick in vegetable inflation in March 2025 is likely to prevent further softening in the food and beverages inflation print for the month, following the substantial cooling observed over the past four months. “This would push up the CPI inflation print mildly to 3.9-4 per cent for the month. Overall, CPI inflation is now expected to average 3.9 per cent in Q4 FY2025, well below the MPC’s projection of 4.4 per cent for the quarter,” she said.
A research report by HDFC Bank also expects inflation to be close to 3.8-4 per cent in March, with the Q4 average tracking at 4 per cent. For FY26, “we estimate average inflation at 4.2 per cent. An early summer and heatwave predictions for certain regions present an upside risk to food inflation,” the report noted.
Published on April 14, 2025
Retail inflation based on the Consumer Price Index (CPI) is likely to have closed fiscal year 2024-25 between 3.8 per cent and 4 per cent in March. The official data will be released on Tuesday.
Vegetable prices have shown a mixed trend, while gold prices continue to rise. This suggests that food inflation is expected to remain flat, but core inflation (headline inflation excluding food and fuel) may witness an uptick.
Still, headline inflation is expected to hover around 4 per cent — the median of the targeted inflation range of 2 to 6 per cent. This provides comfort to the Monetary Policy Committee as it reviews the policy interest rate, commonly known as the repo rate (the rate at which the Reserve Bank of India lends to scheduled commercial banks), especially after two successive cuts.
The year-on-year (y-o-y) inflation rate based on the All-India Consumer Price Index (CPI) for February 2025, compared to February 2024, was 3.61 per cent. This marked a decline of 65 basis points in headline inflation from January 2025, making it the lowest y-o-y inflation rate since July 2024.
Similarly, food inflation for February 2025 stood at 3.75 per cent compared to February 2024. A sharp decline of 222 basis points was observed in food inflation between January and February 2025. The February 2025 food inflation figure was the lowest since May 2023.
D K Srivastava, Chief Policy Advisor at EY India, expects this trend to continue in March. “The average for January and February was 3.9 per cent, and for the quarter (January-March), it is going to be below 4 per cent,” he said.
A report by CRISIL highlights a divergent trend in TOP (Tomato, Onion, and Potato) prices during March. Tomato prices declined 34 per cent y-o-y to ₹21/kg in March 2025, down from ₹32/kg in March 2024. This drop was driven by a 29 per cent increase in tomato arrivals across the country, particularly in the southern States, which saw a robust rabi crop due to increased acreage and better yields amid healthy reservoir levels.
In contrast, potato and onion prices rose by 2 per cent and 6 per cent, respectively. Meanwhile, overall vegetable prices increased by 19 per cent. These trends are expected to impact both food and headline inflation numbers.
Aditi Nayar, Chief Economist at ICRA, believes that the sequential uptick in vegetable inflation in March 2025 is likely to prevent further softening in the food and beverages inflation print for the month, following the substantial cooling observed over the past four months. “This would push up the CPI inflation print mildly to 3.9-4 per cent for the month. Overall, CPI inflation is now expected to average 3.9 per cent in Q4 FY2025, well below the MPC’s projection of 4.4 per cent for the quarter,” she said.
A research report by HDFC Bank also expects inflation to be close to 3.8-4 per cent in March, with the Q4 average tracking at 4 per cent. For FY26, “we estimate average inflation at 4.2 per cent. An early summer and heatwave predictions for certain regions present an upside risk to food inflation,” the report noted.
Published on April 14, 2025
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The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making
The point of using Lorem Ipsum is that it has a more-or-less normal distribution of letters, as opposed to using ‘Content here, content here’, making it look like readable English. Many desktop publishing packages and web page editors now use Lorem Ipsum as their default model text, and a search for ‘lorem ipsum’ will uncover many web sites still in their infancy.
It is a long established fact that a reader will be distracted by the readable content of a page when looking at its layout. The point of using Lorem Ipsum is that it has a more-or-less normal distribution
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