Mint poll says March inflation below 6%

Consumer price inflation data for March is due to be released on Wednesday.

Estimates in the poll ranged from 5.4% to 6.4%, but except for one economist who predicted a figure of 6.4%, all others gave numbers below 6%. If the median forecast holds true, inflation will fall within the Reserve Bank of India’s (RBI) inflation target range for only the third time in 12 months in 2022-23.

Economists expect food inflation, which accounts for over 40% of the consumer price index (CPI) basket, eased further in March, leading to a decline in overall inflation. According to the latest statement of the Monetary Policy Committee, food inflation fell from 6% in January to 5.95% in February, and was one of the primary factors for higher inflation between December 2022 and February 2023.

Barclays economist Rahul Bajoria said, “Amid softening food prices, we expect the higher base March CPI to ease to 5.7% year-on-year, with most of the moderation felt in food inflation.” On a year-on-year basis, we estimate food inflation to moderate to 4.8% due to the higher base.”

Headline inflation rose to 6.95% from 6.07% between February 2022 and March 2022, while food inflation rose to 7.47% from 5.93% during the same period last year – the base effect Bajoria was referring to.

RBI’s Monetary Policy Committee (MPC) in its latest meeting cut its inflation forecast for FY24 to 5.2% from 5.3% on the back of expectations of record rabi foodgrain production. However, it said it was mindful of any risks to food inflation from higher uncertainty in weather and crude oil prices.

“Inflation is likely to remain at sub-5% in April-June, though driven by favorable base effects,” said economists at Standard Chartered Bank.

“The MPC is unlikely to see the need for further increases unless inflation once again moves above or close to the upper limit of the mandated band of 2-6%.”