Report: Inflation will also decline after debt, reaching a five-year low, and vegetable costs will decline

Now along with depositors and investors, common people too are going to benefit from the second 0.25 percent cut in the repo rate. Retail inflation will be 3.47 percent in March with a fall in the price level of food items. It will be the lowest in five years and it stood at 3.61 percent in February. It will further raise the probability of an interest rate cut in June too. Retail inflation data could be announced on Friday.

According to the Center for Monitoring the Indian Economy (CMIE), the average rate of retail inflation is estimated to be 4.64 percent in the financial year 2024-25. It was 5.36 percent in 2023-24. That is, there can be a decline of more than one percent. The decline will be because the prices of vegetables and pulses are continuously softening.

CMIE said, food inflation is estimated to be three percent in March, which was 3.3 percent in February. This happened due to the reduction in the prices of cereals, eggs, fish, and meat along with vegetables and pulses. However, inflation pressure in sugar, edible oil, milk, and fruits has created an obstacle.

The report said that vegetable prices are expected to fall by 5.1 percent in March. Prices are improving with the arrival of crops from November 2024. According to the Department of Consumer Affairs, retail prices of vegetables and arrivals of the market show that the price continued to fall in March as well. The average price of tomato, onion and potato was Rs 21, Rs 34.4, and Rs 23.8 per kg respectively. The prices of major vegetables have fallen sharply for the last six-eight months. In July-November, 2024, the prices of tomato and onion reached Rs 65.6 and Rs 56.3 per kg respectively. At the same time, potato was being sold at Rs 37.3 per kg. In the last three months, the arrival of garlic, ginger, cabbage and brinjal in the markets has been more than a year ago. Due to this, their prices have also fallen sharply.

Pulses prices are expected to fall by 2.3 percent in March. Due to good Kharif crop, the prices of tur fell by 5.2 percent. The prices of gram fell by two percent before the Rabi crop. The prices of other pulses like moong, masoor and urad have also come down. Overall, prices of items included in the inflation basket have been declining since November.

CMIE estimates that cereal inflation has declined to 5.3 percent in March. Wheat flour prices have fallen by 0.1-0.7% in March compared to February. Inflation in other food items is expected to rise. In particular, prices of oil and fats may rise from 16.4 percent in February to 17.2 percent in March. Retail prices of mustard, sunflower and soybean oil have also increased, after declining a year ago.