India’s retail inflation dropped to 5.66 per cent in March against the previous month’s 6.44 per cent, official data showed on Wednesday.
According to the data released by the Ministry of Statistics and Programme Implementation, rural inflation stood at 5.51 per cent while urban inflation was at 5.89 per cent in March. In February this year, it was 6.72 per cent and 6.10 per cent for rural and urban inflation respectively. According to the data, India’s Consumer Food Price Index (CFPI) fell to 4.79 per cent, as compared to 5.95 per cent in the previous month.
In February, retail inflation eased to 6.44 per cent against 6.52 per cent in January but it was above the Reserve Bank of India’s tolerance limit.
The Reserve Bank of India, in its first monetary policy review meeting in 2023-24, decided to keep the key benchmark interest rate – the repo rate – unchanged at 6.5 per cent with readiness to act should the situation so warrant.
India’s retail inflation was above RBI’s 6 per cent target for three consecutive quarters and had managed to fall back to the RBI’s comfort zone only in November 2022. Since May last year, the RBI has increased the short-term lending rate by 250 basis points, including the latest 25 bps hike, to tame inflation. Raising repo rate helps in cooling demand in the economy and thus helps in managing inflation. (ANI)