New Delhi — In a sign of easing price pressures, India’s retail inflation dropped to a nearly six-year low of 3.34% in March 2025, helped by a sharp decline in the prices of vegetables and protein-rich items. This marks a steady decline from 3.61% in February and is significantly lower than 4.85% in March 2024, according to data released by the Ministry of Statistics and Programme Implementation (MoSPI).
This is the lowest inflation reading since August 2019, when Consumer Price Index (CPI)-based inflation had touched 3.28%. The decline provides a boost to the Reserve Bank of India’s recent policy move, which saw the key repo rate cut by 25 basis points last week.
Food Inflation Sees Steep Fall
Food inflation, which has been a primary driver of overall price rise in previous months, came in at 2.69% in March, down from 3.75% in February and a steep drop from 8.52% a year ago. This is the lowest level since November 2021, thanks largely to falling prices of vegetables, eggs, pulses, meat, and fish.
In rural areas, food inflation eased to 2.82%, down from 4.06% in February, while urban food inflation fell to 2.48%, compared to 3.15% a month earlier.
Urban vs. Rural Trends
While rural India saw a sharper drop in both headline and food inflation, urban inflation trends were mixed:
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Urban headline inflation inched up slightly to 3.43% in March from 3.32% in February.
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Rural headline inflation dropped to 3.25% from 3.79%.
Sectoral Snapshot
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Fuel and light inflation stood at 1.48%, ending an 18-month-long deflationary streak.
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Education inflation was at 3.98%, while healthcare rose by 4.26%.
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Transport and communication recorded 3.30% inflation in March.
What’s Getting Cheaper—and Costlier
Top 5 Items with Highest Year-on-Year Inflation:
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Coconut oil – 56.81%
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Coconut – 42.05%
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Gold – 34.09%
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Silver – 31.57%
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Grapes – 25.55%
Top 5 Items with Deflation:
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Ginger – (-38.11%)
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Tomato – (-34.96%)
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Cauliflower – (-25.99%)
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Jeera – (-25.86%)
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Garlic – (-25.22%)
Inflation Across States
Above National Average:
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Kerala: 6.59%
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Karnataka: 4.44%
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Chhattisgarh: 4.25%
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Jammu & Kashmir: 4.00%
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Maharashtra: 3.86%
Below National Average:
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Telangana: 1.06%
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Delhi: 1.48%
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Jharkhand: 2.08%
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Rajasthan: 2.66%
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Gujarat: 2.63%
Expert Takeaways
Rajani Sinha, Chief Economist at Care Ratings, noted that the moderation in CPI was below expectations, driven by food price softness. “Encouraging signs such as a strong Rabi harvest and stable reservoir levels bode well for food inflation,” she said. However, she flagged rising edible oil prices and global supply concerns as potential risks.
Sinha expects FY26 inflation to average 4.2%, with further rate cuts on the table, especially if geopolitical uncertainties persist. “We foresee another 50 basis points reduction in policy rates during FY26,” she added.
Aditi Nayar, Chief Economist at ICRA, pointed out that the sharp drop in March inflation was primarily due to perishables, but warned that rising temperatures could reverse some gains. “With a sub-4% print expected again next month, a June 2025 rate cut looks likely, unless GDP data surprises to the upside,” she said.
RBI Outlook
The Reserve Bank of India, which recently cut the repo rate by 25 bps, has projected CPI inflation for FY2025-26 at 4%, with quarterly forecasts as follows:
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Q1: 3.6%
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Q2: 3.9%
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Q3: 3.8%
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Q4: 4.4%
The central bank maintains that risks are “evenly balanced,” but current inflation trends provide breathing room for more accommodative policy in the months ahead.
