India inflation likely cooled in March, albeit slightly: Reuters poll

India’s consumer price inflation likely eased to a five-month low of 4.91 per cent in March but was still above the Reserve Bank of India’s 4 per cent medium-term target as food price rises persist, according to economists polled by Reuters.

RBI Governor Shaktikanta Das said last week that food price volatility remains a concern. Food price rises have outpaced headline inflation for several months, affecting millions of poor households already heavily dependent on government food subsidies.

Consumer price inflation likely eased to 4.91 per cent in March from February’s 5.09 per cent, an April 4-8 Reuters poll of 50 economists predicted. Forecasts for the data, which will be released on April 12, ranged from 4.57 per cent to 5.35 per cent.

“We estimate that CPI inflation moved markedly lower...The disinflation is broadly attributed to easing in momentum across food, fuel and core items, though some base effects also helped,” noted Shreya Sodhani, analyst at Barclays.

Inflation was expected to return to the RBI’s target next quarter but be above it in subsequent quarters, according to a separate Reuters survey on the longer-term outlook.

Meanwhile, the onset of a heat wave could hamper the inflation downtrend in coming months.

Radhika Rao, senior economist at DBS Bank said potential supply-side shocks were the main risk, while “strong growth limits the need for additional support from monetary policy levers for the time being”.

The economy grew 8.4 per cent in the October-December quarter, beating all estimates in a Reuters poll. It is forecast to grow 7.6 per cent over the 2023-24 April to March fiscal year and outpace its major peers.

Still, the RBI’s next move is widely predicted to be a cut to its key policy rate next quarter.

Core inflation, which strips out volatile food and energy prices, was 3.27 per cent in March, according to the median forecast of 24 economists. Official core inflation figures are not published.