Consumer price inflation hits six-month low of 4.83% in March

12 April 2016

Consumer price inflation in the country eased further in March to a six-month low, helped by smaller rises in food prices, justifying the Reserve Bank's decision to ease policy rates to support economic growth without increasing price pressures.

Consumer price inflation (CPI) stood at 4.83 per cent in March 2016, against 5.25 per cent in March 2015 and 5.26 per cent in February 2016.

Rural inflation rate for March 2016 stood at 5.70 per cent in March 2016 against 5.67 per cent in March 2015 and 6.05 per cent in February 2016.

Urban inflation rate hit a low of 3.95 per cent in March 2016 against 4.75 per cent in March 2015 and 4.30 per cent in February 2016.

The fall in consumer price inflation has been aided by a slight fall in food price inflation to 5.21 per cent in March from 5.30 per cent the previous month.

RBI last week cut its policy rates by 25 basis points to a more than five-year low, and said the central bank would look for more room to ease further if inflation stays benign.

RBI has set annual consumer price inflation ceiling of 4.83 per cent while setting its interest rate policy.

If inflation holds below 5 per cent, that could spur more rate cuts by the central bank.

Retail inflation has eased from double digits in 2013, helped by a plunge in global crude oil prices, tight monetary policy and fiscal consolidation.

Finance minister Arun Jaitley said he would strictly follow the federal deficit target of 3.5 per cent of gross domestic product in the current fiscal year, while allocating more funds to the struggling farm sector.

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