Though remaining in double digits for the fourth straight month, the consumer price index-based (CPI) retail inflation finally exhibited a declining trend and eased to 10.39 per cent in March from 10.91 per cent in February.

Even as the fall in CPI inflation has been marginal, driven mainly by a slight easing in prices of vegetables and protein-based food items, the downward trend witnessed in the official data could not have been timed better as global rating agency Fitch were here in the capital for discussions with Finance Ministry officials on the state of the economy.

While Fitch’s main concern over the year has been the widening twin deficits — on the fiscal front and current account (CAD) — the official data on CPI inflation as well as IIP (Index of Industrial Production) provided a number of positive aspects to North Block officials to argue that the reform measures and other corrective steps taken by the government over the last few months have finally started yielding results with a time lag.

According to the CPI data, inflation in the vegetable segment eased significantly to 12.16 per cent in March from 21.29 per cent in February while in protein-based items such as eggs, meat and fish, the rate of price rise at the retail end stood pegged at 14.36 per cent during the month. Inflation in the oils and fats segment was at 11.72 per cent.

Ironically, however, at a time when government food stocks are at a high and leading to problems in storage, cereals posted the highest inflation level at 17.55 per cent in March among all items in the CPI basket.As per the official data, CPI inflation in urban areas eased to 10.38 per cent in March from 10.84 per cent a month ago while the rise in retail prices for the rural population declined to 10.33 per cent from 11.01 per cent.

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