India witnessed a notable easing in inflation during March 2025, with the all-India Consumer Price Index (CPI) indicating a year-on-year (YoY) headline inflation of 3.34% (provisional). This marks a decline of 27 basis points from 3.61% in February 2025, and more significantly, it's the lowest year-on-year (YoY) inflation recorded since August 2019. The drop was largely attributed to a broad-based moderation in food prices, especially in vegetables, eggs, pulses, cereals, and milk products.
Let's break down the inflation trends sector-wise and by region to get a clearer picture.
Inflation data for March shows a contrasting trend between rural and urban areas. The rural CPI inflation dropped sharply from 3.79% in February to 3.25% in March 2025. The food inflation for the rural sector saw an even steeper decline, from 4.06% in February to 2.82% in March, showcasing easing pressure on essential food commodities.
Meanwhile, urban inflation saw a marginal uptick. The headline CPI inflation for urban areas rose slightly from 3.32% in February 2025 to 3.43% in March 2025. However, this increase was offset by a sharp fall in urban food inflation, which dropped to 2.48% from 3.15% in February. This indicates that while non-food items may have nudged up prices slightly in cities, the drop in food costs provided much-needed relief.
On a monthly basis, the combined CPI index dropped 0.26%, while the CFPI index, which reflects food inflation, decreased by 0.86%, pointing to a deflationary trend in food items during March.
The Consumer Food Price Index (CFPI) for March 2025 registered a YoY inflation of 2.69%, a steep fall of 106 basis points compared to February's 3.75%. It is also the lowest food inflation level since November 2021, a significant indicator of easing price pressures in the food basket.
Food and beverages, which hold substantial weight in the CPI basket, saw an inflation rate of 2.88% with a provisional index value of 196.2. The dip in prices for vegetables, pulses, and dairy items played a key role in this moderation.
Among major food items, ginger (-38.11%), tomato (-34.96%), cauliflower (-25.99%), jeera (-25.86%), and garlic (-25.22%) witnessed the steepest declines. Conversely, some items recorded sharp price increases — coconut oil (56.81%), coconut (42.05%), and grapes (25.55%) led the list of items with the highest YoY inflation.
It's worth noting that while health and education inflation remain slightly elevated, their growth is stable. The rise in fuel and light inflation also signals a return to positive territory after being negative in February, possibly reflecting global oil price fluctuations.
March 2025 saw inflation in India ease to 3.34%, the lowest since August 2019, driven by a sharp fall in food prices, especially vegetables and dairy products. The decline was more prominent in rural areas, where both general and food inflation dipped significantly. Urban areas experienced a mild rise in overall inflation but benefitted from a drop in food-related prices.
Sector-wise, inflation remained under control across most essential goods, with fuel rebounding into positive territory and health and education costs seeing slight increases. This moderation in inflation offers a welcome respite for consumers and hints at a stable economic environment heading into the next quarter.
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