India’s retail inflation cooled to 5.66% in March, bringing it within the Reserve Bank of India’s (RBI) comfort zone. The latest figure is down from 5.91% in February, driven by lower food prices.
The easing of inflationary pressure is likely to give the RBI some breathing room to keep interest rates low and support economic growth. The central bank has been maintaining an accommodative policy stance, keeping interest rates at historic lows to support the economy in the wake of the COVID-19 pandemic.
The RBI’s target range for retail inflation is 2-6%, and the latest figure is well within that range. The central bank had previously expressed concerns about the rising inflationary pressures, particularly in the food and fuel sectors.
However, the latest data suggests that inflationary pressures are starting to ease, thanks in part to a bumper crop of winter-sown crops and lower fuel prices.
Food prices, which account for a significant portion of India’s retail inflation basket, fell by 0.07% in March, compared to a 0.31% rise in February. Meanwhile, fuel prices rose by 0.87% in March, down from 3.53% in February.
The latest inflation figures are likely to be a relief for the Indian government, which has been grappling with high inflation and slowing economic growth. The COVID-19 pandemic has had a major impact on the Indian economy, causing a sharp contraction in growth and putting pressure on households and businesses.
The government has announced a number of measures to support the economy, including a massive stimulus package and a series of structural reforms aimed at boosting growth and job creation.
However, the Indian economy is still facing a number of challenges, including high unemployment and rising debt levels. The government and the RBI will need to continue to take decisive action to support the economy and ensure a sustained recovery.