The wholesale inflation, a proxy for producer prices, was projected at 2.5% by economists in a Reuters poll.
Warnings from the India Meteorological Department on country-wide heat waves have raised concerns about inflationary pressures.
“As weather turns less supportive, and temperatures rise during summer months, vegetable and fruit prices are expected to start climbing seasonally,” said Rahul Bajoria, head of India and ASEAN Economic Research at BofA Global Research.
India’s retail inflation dropped to a seven-month low of 3.61% in February, down from 4.31% in January. The government is set to release the March inflation data later this evening.
RBI’s outlook on inflation
The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) earlier this month said that the inflation has declined, supported by a favourable outlook on food and is expected to moderate in FY26, offering further relief to Indian households.RBI’s MPC has forecast inflation at 4% for the fiscal year 2025-26, as against 4.2% forecasted in the February meeting.For the four quarters of FY26, the RBI MPC has projected inflation to be at 3.6% in the first quarter; Q2 at 3.9%; Q3 at 3.8% and Q4 at 4.4% with risks evenly balanced.
“MPC noted that inflation below the target currently, supported by huge fall in food prices. Moreover, there s decisive improvement in inflation outlook. As per projections, there is now greater confidence of durable alignment of headline inflation with target of 4% over 12 months horizon,” said RBI Governor Sanjay Malhotra.
Economic Survey and inflation risks
The Economic Survey for 2024-25, released earlier in January, 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 uncertainity, inflation volatility, and declining foreign investment remain key macroeconomic challenges.
Content Source: economictimes.indiatimes.com