India’s annual wholesale inflation, measured by the Wholesale Price Index (WPI), slowed to 2.05% in March, down from 2.38% in February, according to data released by the Ministry of Commerce and Industry on Tuesday.
The positive inflation rate in March was mainly driven by higher prices of manufactured products. However, on a month-on-month basis, the WPI recorded a decline of 0.19%, indicating a downward trend. This decline was largely attributed to falling prices in the food, fuel, and power categories.
Retail inflation has also been witnessing a steady decline. The Reserve Bank of India’s Monetary Policy Committee recently revised its inflation forecast for 2025-26 downward to 4%, from the earlier estimate of 4.2%, citing an improved outlook for food prices.
“Headline inflation moderated during January and February 2025 following a sharp correction in food inflation. The outlook for food inflation has turned decisively positive,” RBI Governor Sanjay Malhotra said.
He noted that the uncertainties surrounding rabi crops have largely eased, with the second advance estimates indicating record wheat production and increased output of key pulses compared to last year. Combined with strong kharif arrivals, these factors are expected to contribute to a sustained softening of food inflation.
“The sharp decline in inflation expectations in our latest survey for the next three months and one year ahead would also help anchor inflation expectations going forward,” he added.
Additionally, the decline in crude oil prices supports a favorable inflation outlook. However, global market uncertainties and the potential for weather-related disruptions remain key risks to the inflation trajectory.
Taking all factors into account, and assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.0%, with quarterly estimates of 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4. The RBI Governor said that risks to this outlook are evenly balanced.
— IANS
