India March Consumer Prices Rise 4.83%, Below Median Estimate

  • Consumer prices rise 4.83% versus 5% survey estimate
  • Weather office forecasts above normal July-September monsoon

India’s retail inflation eased more than estimated and the weather office predicted above normal rainfall, which could create room for more monetary easing.

Consumer prices rose 4.83 percent in March from a year earlier after a 5.26 percent increase in February, the Statistics Ministry said in a statement on Tuesday. The median of 29 estimates in a Bloomberg survey of economists had predicted a 5 percent increase. Industrial output expanded 2 percent in February compared with an estimated 0.8 percent gain.

The July-September monsoon rains are crucial to keep prices in check as it accounts for about 80 percent of India’s total rainfall and waters more than 50 percent of farmland. Reserve Bank of India Governor Raghuram Rajan, who cut interest rates last week, wants to limit consumer inflation to 5 percent by March 2017 and said good rains could lead to further monetary easing.

After back-to-back droughts that hurt crops and led to higher food prices, India’s weather department said on Tuesday that the monsoon may be above normal this year.

"It’s a very pleasant surprise," said Saugata Bhattacharya, an economist at Axis Bank Ltd. in Mumbai. "The central bank would have space for another 25 basis point reduction" in the policy rate.

Key Numbers

  • Consumer food prices rose 5.21 percent in March from a year earlier after a 5.3 percent increase in February
  • The decrease was led by a 1.1 percent drop in fruit prices; pulses rose 34 percent
  • Health costs rose 5.3 percent; education and personal care both increased 5.7 percent
  • The rupee briefly pared gains in the off-shore market, with the one-month non-deliverable forward falling as low as 66.76 a dollar from 66.68; local markets were shut before the data
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