Retail Inflation rises at 3.81% in March 2017

Consumer Price Index (CPI) inflation or retail inflation for the month of March 2017 stood at 3.81%, said Ministry of Statistics and Programme Implementation (MOSPI) on Wednesday.

In the month of February, CPI stood at 3.65% raising for the first time in seven months from 3.17% in January.

The combined CPI in March was 3.81% as against 3.65 in February and 4.83% in the month of March, 2016. The rural CPI was at 3.75% in the month of March as compared to 3.67% in February and 5.70% in March, 2016. The urban CPI was at 3.88% in March as against 3.55% in February and 3.95% in March, 2016.

The Consumer Food Price Index (CFPI) combining Rural and Urban in the month of March dropped to 1.93% as against 2.01% in the month of February and 5.21% in March, 2016. As per the data, the rural CFPI in March was 1.85% as against 2.08% in last month and 5.79% in March, 2016. The urban CFPI in the month of March was 2.27% as compared to 1.87% in February and 3.98% during the same period last year.

source: tradingeconomics.com

Indicating risk further over inflation, RBI surprised investors in its first monetary policy for FY18, by increasing reverse repo rate by 25 basis points to 6% from 5.75%. The central bank kept policy rate unchanged at 6.25%. 

RBI expected headline CPI inflation to undershoot the target of 5% for Q4 of 2016-17 in view of the sub-4 per cent readings for January and February. For 2017-18, inflation is projected to average 4.5% in the first half of the year and 5% in the second half.

According to the Reuters poll, India's inflation was seen climbing and touching distance of the Reserve Bank of India`s (RBI) 4% medium-term target in March, driven by higher food costs.

Nikhil Gupta, Madhurmi Chowdary analysts at Motilal Oswal had said, “It implies that CPI inflation averaged 4.6% in FY17 YTD (until February), as against 4.9% in the year-ago period. We expect headline inflation to remain below 4% in March too, implying inflation at 4.5% in FY17, lower than 4.9% in FY16.”

ICRA expected the CPI inflation to rise to above 4.5% in March 2017, as the base effect continues to unwind and prices of perishables track a seasonal uptrend, while remaining below the RBI’s forecast of 5%.