For the first time in five months, India’s retail inflation slid below the 5% mark in March, to 4.85%. While it constituted only a marginal easing from the 5.1% recorded in February, this was the lowest pace of price rise recorded since May 2023. The average inflation of 5% clocked in the final quarter of 2023-24 is not just in line with Reserve Bank of India (RBI) projections but also the slowest in three years. For the full year gone by, consumer price rise averaged 5.4%, as the RBI had forecast — a four-year low. Core inflation, excluding energy and food prices, has been under the 4% mark for four straight months. QuantEco Research estimates that overall fuel inflation in India hit a four-year low of -2.7% in March, which was the seventh straight month of disinflation in the segment. No doubt, the ₹2 per litre cuts in petrol and diesel prices and the ₹100 drop in cylinder prices have helped, though the full impact of these pre-poll steps will be seen this month. Amid these pleasant portents, two critical problems persist — food bills remain problematically high, even as overall inflation is rising for rural consumers, already hit by a weak monsoon.

Inflation, as measured by the Consumer Food Price Index, has averaged an alarming 8% through 2023-24, and 8.5% in the January to March quarter. And while some government interventions have helped check a few items’ prices and hopes of a normal monsoon this year could lift some pressure points, perhaps from July onwards, the ongoing heat waves across large parts of the country remain a threat to perishable supplies. Moreover, some key items are seeing deeply entrenched inflation trends — double-digit inflation has now been seen for five months in vegetables, 10 months in pulses and a whopping 22 months in spices. Cereals inflation picked up pace in March, breaking a seven-month moderating streak, while eggs, meat and fish are also seeing spikes. While the RBI expects inflation to cool to 4.5% this year, it is projected at 4.9% for the first quarter. A durable descent to its 4% target that has now been elusive for 54 months, remains tricky. For urban consumers, inflation eased tantalisingly close to the target in March at 4.14%, but it rose in rural India to 5.45% from 5.34% in January and February. While a prolonged phase of high prices is already hurting consumption, the resurgence in crude oil prices to a seven-month high of $90 a barrel this month, faltering hopes of interest rate cuts in the United States and the European Union, and strife-fuelled shipping cost spikes, pose fresh worries on the inflation front in the months to come.