India’s retail inflation eased to a near six-year low of 3.34% in March, leaving the door open for the Reserve Bank of India to cut its benchmark interest rate in the upcoming policy in June.

This is the lowest consumer price index (CPI) inflation since September 2019.

CPI inflation had dropped to a seven-month low of 3.61% in February and was at 4.85% in March last year. Food inflation in March 2025 is the lowest after November 2021.

Headline inflation thus remained below the RBI’s ideal 4% inflation target.

Food inflation, which accounts for nearly half of the Consumer Price Index (CPI) basket, eased to 2.69% in March, compared with 3.75% in February.

The key items having the lowest year-on-year inflation in March were ginger (-38.11%), tomato (-34.96%), cauliflower (-25.99%), jeera (-25.86%) and garlic (-25.22%).

Coconut oil (56.81%), coconut (42.05%), gold (34.09%), silver (31.57%) and grapes (25.55%) were the items showing the highest year-on-year inflation in March.

Kerala was the state with the highest CPI inflation in March at 6.59%, ahead of Karnataka, Chhattisgarh and Maharashtra. Bengal’s CPI inflation in March was at 3.17%.

With inflation cooling, the RBI, since February, has cut the benchmark repo rate by 50 basis points to 6%.

Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, expects the RBI to continue on its accommodative stance with the terminal repo rate likely around 5-5.25%.

The RBI has projected CPI inflation for FY26 at 4%, with Q1 at 3.6%, Q2 at 3.9%, Q3 at 3.8% and Q4 at 4.4%. The risks are evenly balanced.