New Delhi: Easing food prices pulled down retail inflation in March to a 3-month low of 5.17 percent despite unseasonal rains, renewing industry clamour for further cut in RBI policy rate to boost growth.
Retail inflation as measured by Consumer Price Index was 5.37 percent in February, and 5.19 percent in January. It was 8.25 percent in March last year, government data released on Monday said.
The easing prices of milk, vegetables and fruits brought down the overall food inflation to 6.14 percent in March, from 6.79 percent recorded in February.
After cutting rates twice this year, in its first bi-monthly monetary policy announcement in the new fiscal, the Reserve Bank had kept the key policy rate unchanged on fears of unseasonal rains impacting food prices.
Industry body CII's Director General Chandrajit Banerjee said inflation continues to remain moderate and has in fact declined when compared to the previous month.
"This should persuade the RBI to resume its rate easing cycle to support growth without being too concerned about the impact on inflation," he said.
Anis Chakravarty, Senior Director with Deloitte in India, said the decline in retail inflation is a "positive development... Despite the unseasonal rains, food inflation declined (month-on-month)".
The decline in inflation, he said, "reinforces the view that further monetary easing is imminent".
Retail inflation declined for 'cereals and products', although it was up in the case of protein rich items like 'meat and fish'.
The rate of price rise in the food and beverages segment as a whole was 6.2 percent in March, lower than 6.76 percent in the previous month.
The CPI-based retail inflation has been calculated with a new base year of 2012.
Inflation in the fuel and light segment was 5.07 percent last month, up from 4.72 percent in February.
In the housing segment, inflation was 4.77 percent last month, as compared to 4.98 percent.
For the rural segment, the overall retail inflation was 5.58 percent in March and 4.75 percent for urban centres.
"Stability in retail inflation would help strengthening of macroeconomic system and pave the way for soft monetary policy environment, going forward," PHD Chamber of Commerce President Alok Shriram said.
In its comments, ICRA said if the monsoon is normal and crude oil prices do not post a significant rebound, CPI inflation is expected to average 5.5 percent in 2015, "limiting future repo rate cuts to 50 bps over the remainder of 2015".
To calculate the CPI, price data are collected from selected towns by the field operations division of NSSO and from selected villages by the Department of Posts.
