Retail inflation rises to 12-mth high of 3.4% in Mar

Price Pressure | Higher food prices and costlier LPG push inflation up

Informist

New Delhi

India's headline inflation, based on the Consumer Price Index (CPI), rose to a 12-month high of 3.40% in March from 3.21% in February due to higher food inflation, data released Monday by the statistics ministry showed. Core inflation, which excludes food and fuel items, eased to 3.3% in March from 3.4% in February.

The food price index was up 0.3% month-on-month in March, which led to a similar rise in the general index from February. CPI inflation in March was in line with expectations; an Informist poll had projected headline inflation at 3.4%. Retail food inflation rose to 3.87% in March from 3.47% in February. Tomato inflation was 35.99%, while cauliflower inflation was 34.11%. Among the five key items with low inflation, onion inflation was (-)27.76%, potato inflation was (-)18.98%, and garlic inflation was (-)10.18%. Food and beverages inflation was 3.71% in March.

Electricity, gas and other fuel inflation jumped to 1.65% in March from 0.14% in February, reflecting the impact of the liquefied petroleum gas (LPG) price hike following the war in West Asia.

The personal care and miscellaneous category recorded the highest inflation at 18.65%, driven by high jewellery prices. Silver jewellery recorded the highest inflation at 148.61%, followed by gold, diamond and platinum jewellery at 45.92%.

Aditi Nayar, chief economist at ICRA, said the slight rise indicates a mild initial impact of the West Asian crisis on the headline number. Nayar noted that the sequential uptick was driven by food and the electricity, gas and other fuels groups.

At 3.63%, rural inflation was higher in March compared to urban inflation at 3.11%. In February, rural inflation was 3.37%, while urban inflation was 3.02%.

Among states and Union Territories, Telangana, Sikkim, Puducherry and Andhra Pradesh reported the highest inflation at 5.83%, 4.28%, 4.18% and 4.05% respectively. Mizoram at 0.66% and Ladakh at 0.94% reported the lowest inflation.

Headline inflation averaged 3.1% in the March quarter and 2.1% in 2025-26, in line with the Reserve Bank of India (RBI) forecasts. After the monetary policy meeting last week, RBI Governor Sanjay Malhotra said risks to inflation forecasts were on the upside. The central bank projects headline inflation to rise to 4.0% in the June quarter and average 4.6% in FY27.

Gareth Leather, senior Asia economist at Capital Economics, said higher global energy prices will put upward pressure on inflation in the coming months as they feed through into food and other consumer prices.