Photographer: Dhiraj Singh/Bloomberg

India Inflation Rises Less Than Expected as Food Prices Ease

Updated on
  • Data gives central bank time to assess after tightening policy
  • Impact of demonetization may also be fading, figures show

India’s inflation rose less than expected in March, taking pressure off the central bank for more action after it unexpectedly tightened monetary policy last week.

Key Points

  • Consumer prices rose 3.81 percent in March from a year earlier, the Statistics Ministry said in a statement from New Delhi on Wednesday
  • That’s slower than the 3.94 percent median estimate in a Bloomberg survey of 38 economists and compares with a February reading of 3.65 percent
  • Industrial production fell 1.2 percent in February after rising 2.7 percent in January; economists had predicted a 1.3 percent gain

Big Picture

The data gives the Reserve Bank of India time to assess the outlook for the $2-trillion economy after Governor Urjit Patel last week unexpectedly raised the reverse repo rate to fight inflation, following the U.S. Federal Reserve in withdrawing stimulus. The numbers further indicate the impact of demonetization is waning, though other indicators point to strengthening activity and rising employment.

Economist Takeaway

“The surprise came largely on food prices, which didn’t rise as much as expected,” Garima Kapoor, Mumbai-based economist at Elara Securities Pvt said in a phone interview. “Going forward as the mercury rises, we expect prices to only rise.”


  • Consumer food prices eased to 1.93 percent from February’s 2.01 percent
  • Housing costs rose 4.96 percent
  • Fuel costs climbed 5.56 percent

(A previous version of this story corrected the second bullet point to show inflation rose from February.)

— With assistance by Manish Modi

(Updates with quote in fourth paragraph.)
    Before it's here, it's on the Bloomberg Terminal. LEARN MORE