Retail inflation dropped to 5.91% in March from the 6.58% in February, mostly on a drop in food prices, according to the Consumer Price Index data released by the National Statistical Office on Monday.
Food inflation fell to 8.76% in March, in comparison with the 10.81% in February. Vegetable price inflation saw the sharpest fall, dropping from 32% to 19% over the course of a month. Spices and prepared food, snacks and sweets were the only food categories that saw a slight increase in prices.
Retail inflation has been easing off since hitting an almost six-year high of 7.59% in January, and analysts expect the trend to continue over the next few months.
“With low crude oil prices and sharp slowdown in the economy, CPI inflation is expected to fall further,” said Rajani Sinha, chief economist and head, research, at Knight Frank India. “Weak demand side pressure on inflation would outweigh any supply side bottlenecks in the near-term,” she added.
The COVID-19 crisis has also affected field data collection used to calculate inflation, although the NSO said the overall impact of missing price data on CPI estimates was within acceptable limits.
“Keeping in view the preventive measures taken by NSO and announcement of a nationwide lockdown..., field work for price collection of CPI was suspended... from 19th March, 2020 and about 66% of price quotations were received,” said an official statement. For assessing the price behavior of remaining price quotations, NSO follows well established and internationally accepted methodology and practices.”
Price data is usually collected from selected 1,114 urban markets and selected 1,181 villages by the Field Operations Division of NSO in a uniform weekly roster.
