India's Wholesale Inflation Eases To 2.05% In March, Lowest In 4 Months

(MENAFN- KNN India) New Delhi, Apr 15 (KNN) India's wholesale inflation eased to a four-month low of 2.05 per cent in March on an annual basis, down from 2.38 per cent in January, according to government data released on Tuesday.

The government attributed the positive inflation rate in March 2025 primarily to increased prices in food product manufacturing, other manufacturing sectors, food articles, electricity, and textile manufacturing.

However, several key inflation indicators showed moderation compared to previous months.

Wholesale food inflation slowed considerably to 4.66 per cent last month from 5.94 per cent in February. Primary articles inflation dropped significantly to 0.76 per cent in March from 2.81 per cent in February.

Meanwhile, fuel and power wholesale prices stood at 0.20 per cent in March, recovering from a contraction of 0.71 per cent in February.

Prices of manufactured products, which account for approximately 64 per cent of the wholesale price index, increased to 3.07 per cent after rising 2.86 per cent in February.

Concurrently, warnings from the India Meteorological Department about nationwide heat waves have raised concerns regarding potential inflationary pressures in the coming months.

Rahul Bajoria, Head of India and ASEAN Economic Research, BofA Global Research, noted, "As weather turns less supportive, and temperatures rise during summer months, vegetable and fruit prices are expected to start climbing seasonally."

This comes as India's retail inflation dropped to a seven-month low of 3.61 per cent in February, down from 4.31 per cent in January. The government is scheduled to release the March retail inflation data later today.

Food prices in wholesale markets have eased in recent months as vegetable output improved. Vegetable prices fell 15.88 per cent, compared to a 5.80 per cent drop in the prior month.

Onion inflation eased substantially to 26.65 per cent in March, down from 48.05 per cent in February, while potato prices contracted by 6.77 per cent compared to a 27.54 per cent increase during the previous month.

Pulses recorded deflation of 2.98 per cent last month compared to deflation of 1.04 per cent in February. Cereal prices in wholesale markets rose 5.49 per cent in March, against a 6.77 per cent rise a month earlier.

The Reserve Bank of India's Monetary Policy Committee earlier this month stated that inflation has declined, supported by a favourable outlook on food, and is expected to moderate in FY26, offering further relief to Indian households.

The RBI MPC has forecast inflation at 4 per cent for the fiscal year 2025-26, down from 4.2 per cent forecasted in the February meeting.

For the four quarters of FY26, the RBI MPC has projected inflation to be 3.6 per cent in the first quarter, 3.9 per cent in the second quarter, 3.8 per cent in the third quarter, and 4.4 per cent in the fourth quarter, with risks evenly balanced.

RBI Governor Sanjay Malhotra stated, "MPC noted that inflation below the target currently, supported by huge fall in food prices. Moreover, there is decisive improvement in inflation outlook.

“As per projections, there is now greater confidence of durable alignment of headline inflation with target of 4 per cent over 12 months horizon," he added.

The Economic Survey for 2024-25, released in January, had projected that food inflation would soften in the final quarter of FY25. However, the report also cautioned that global uncertainties continue to pose risks to India's economic stability.

Factors such as a weakening rupee, global economic uncertainty, inflation volatility, and declining foreign investment remain key macroeconomic challenges for the country going forward.

(KNN Bureau)

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