As per the Government data, the retail inflation has increased to 5.52% in March primarily because of higher food prices. In February, the Consumer Price Index (CPI) based retail inflation stood at 5.03%. As per the data released by the National Statistical Office (NSO), the rate of price rise in the food basket has accelerated to 4.94% in March, whereas it was 3.87% in February.
In the ‘fuel and light’ category, the inflation was 4.50% during March vis-à-vis 3.53% in February. Earlier this month, the Reserve Bank of India had projected the retail inflation at 5% in the January-March quarter of 2020-2021 and 5.2% in the first two quarters of the current fiscal year.
The CPI inflation fell in December 2020 after breaking the upper tolerance edge of 6% for six consecutive months from June to November 2020. It further reduced to 4.1% in January 2021 because of a sharp correction in vegetable prices and relaxing of cereal prices. It, however, got propelled by base effects and recoiled to 5% in February.
The Reserve Bank of India has been asked to keep CPI inflation at 4% with a margin of 2% on either side while arriving at its monetary policy. In its last monetary policy, RBI has retained the Repo rate in its last monetary policy citing inflationary concerns.