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Retail Inflation Declines To 4.85% In March, A Five-Month Low

The government has tasked RBI to ensure inflation remains at 4 per cent (Representational)

New Delhi:

Retail inflation declined to a five-month low of 4.85 per cent in March mainly due to cooling food prices, according to official data released on Friday. This decrease in inflation is a positive indicator for the economy and could potentially lead to increased consumer spending and investment.

The Consumer Price Index (CPI) based retail inflation was 5.09 per cent in February and 5.66 per cent in March 2023. Previously, CPI-based inflation was the lowest at 4.87 per cent in October 2023. This downward trend in inflation is a welcome development for policymakers and could indicate stable economic conditions.

The inflation in the food basket was at 8.52 per cent in March, down from 8.66 per cent in February, according to the data released by the National Statistical Office (NSO). This decrease in food inflation highlights the importance of stable food prices in controlling overall inflation rates.

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The government has tasked the Reserve Bank to ensure inflation remains at 4 per cent, with a margin of 2 per cent on either side. This target set by the government indicates a commitment to maintaining price stability and economic growth in the country.

According to the Reserve Bank, which factors in consumer inflation while arriving at its bi-monthly monetary policy, food price uncertainties continue to weigh on the inflation trajectory going forward. The central bank has projected retail inflation at 4.5 per cent for the current fiscal assuming a normal monsoon. This forward-looking approach by the RBI highlights the importance of monitoring external factors that could impact inflation rates.

Continuing geopolitical tensions also pose an upside risk to commodity prices and supply chains. These external factors present challenges for policymakers in maintaining price stability and ensuring sustainable economic growth.

The RBI projected inflation at 4.9 per cent in the April-June quarter and at 3.8 per cent for the September quarter. These projections provide valuable insights for investors and businesses in planning their financial strategies and operations in the coming months.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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