India’s March Inflation Holds at 3.6% After Four-Month Decline
India’s retail inflation rate remained steady at 3.6% in March 2025, bringing a four-month easing trend to a halt. The unchanged figure from February’s 3.61% was driven primarily by a sharp rise in gold prices, which helped offset continued softness in food prices.
Economists noted that while food price moderation has been consistent in recent months, March likely marked a turning point. Uneven rainfall and early summer heat waves are expected to pressure agricultural output, potentially reversing the soft food price trajectory in the coming weeks.
Core Inflation Inches Up on Gold Surge
Core inflation, which strips out volatile food and fuel components, rose slightly to 4.1% in March from an estimated 3.9% to 4.0% in February. This increase was largely attributed to a 7% jump in gold prices, as global investors turned to the precious metal amidst rising concerns over international trade tensions, particularly U.S. tariff measures.
Despite the stability in the overall Consumer Price Index (CPI), the rise in core inflation could signal underlying inflationary pressures building up within the economy.
RBI Expected to Cut Rates Amid Growth Concerns
With inflation well within the Reserve Bank of India’s (RBI) comfort zone of 2–6%, policymakers are expected to continue prioritizing economic growth. The RBI had already trimmed its benchmark interest rate by 25 basis points earlier in April and is likely to implement an additional cut in August to support slowing demand.
The steady CPI reading strengthens the case for more accommodative monetary policy, especially with the broader economic environment still facing headwinds from weak consumer spending and global uncertainties.
Weather Risks and Inflation Outlook
The India Meteorological Department’s warning of widespread heat waves over the coming weeks has heightened concerns about a seasonal uptick in vegetable and fruit prices. As the summer months progress, any sustained weather irregularities could spark fresh food inflation, complicating the RBI’s policy calculations.
The official inflation data for March is set to be released on April 15, with projections ranging between 3.2% and 3.9%. Regardless of the exact figure, inflation is expected to remain well within target, giving the central bank ample room to act if economic conditions warrant further stimulus.
