India’s inflation falls to 67-month low, boosting economic outlook

Food inflation fell to 2.69% in March, against 3.75% in February.

Retail inflation Drops to 3.34% in March

India’s consumer price inflation (CPI) cooled to a 67-month low of 3.34% in March, down from 3.61% in February, according to official data released on April 11. This marks the second consecutive month retail inflation has stayed below the Reserve Bank of India’s (RBI) 4% target.

Food Inflation Remains Subdued

A key driver behind the softer inflation was a continued dip in food prices. Food inflation dropped to 2.69% in March, compared to 3.75% in February, reflecting stable or lower prices for essential items.

Full-Year Inflation Moderates to 4.6%

The economy closed the fiscal year FY25 with an average inflation rate of 4.6%, a notable drop from 5.4% in FY24. The RBI has forecasted further easing, projecting 4% inflation for the coming year — a downward revision from its earlier estimate of 4.2%.

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Inflation Forecasts Cut for Q1 and Q2

In its latest monetary policy meeting, the RBI’s Monetary Policy Committee (MPC) revised inflation forecasts for the first half of FY26:

• Q1 forecast: Lowered to 3.6% from 4.5%
• Q2 forecast: Trimmed to 3.9% from 4%

The downward revisions reflect confidence in continued price stability.

Rate Cuts and Growth Outlook

Amid easing inflation, the RBI cut its policy rate to 6% in April — the second consecutive rate cut this year — potentially paving the way for a more accommodative monetary policy stance.

However, the central bank also slightly revised its growth outlook down to 6.5%, from an earlier projection of 6.7%, citing global uncertainties and domestic challenges.