There has been an increase in retail inflation in the month of March. The figure has reached 3.40 percent. The special thing is that retail inflation has increased for the fifth consecutive month. Even after that, the inflation rate tolerance level in the country is less than 4 percent. By the way, RBI had recently predicted in its policy meeting that there is a possibility of inflation increasing in the country. The reason for this is the Middle East War. Due to which we are facing a lot of interruptions in supply. The prices of gas cylinders have become very expensive in the country. Besides, there has been a rise in the prices of crude oil along with imported goods. Let us also tell you that after all the figures regarding inflation have been presented by the government.
increase in inflation
According to government data released on Monday, India’s retail inflation rate increased marginally to 3.40% in March, from 3.21% in February. The reason for this was that geopolitical tensions and supply-side pressures arising from the Middle East started having an impact on prices. A Reuters poll of 45 economists had estimated that the inflation rate could increase marginally to 3.48 percent in March. In this, the impact of the huge increase in fuel prices was mitigated to some extent by the fall of about 11 percent in gold prices that month after increasing tensions related to the Iran war. Despite this increase, under the revised framework, inflation has remained below the RBI’s medium-term target range of 4 per cent (2% to 6%) for 12 consecutive months.
Increase in inflation for the 5th consecutive month
However, there has been an increase in retail inflation in the country for the 5th consecutive month. If we look at the data, there is a continuous increase in retail inflation after October 2025, when the inflation figure in the country had come down to 0.25 percent. After that, in the month of November the inflation rate came down to 0.71 percent. In the month of December, the retail inflation rate had come down to 1.33 percent. If we talk about January and February, the inflation figures had come down to 2.74 percent and 3.21 percent respectively.
Tension in Middle East
These latest inflation figures have come at a time when geopolitical uncertainty between Iran, Israel and the United States has increased significantly, raising concerns about disruptions in global oil supply. Tensions escalated after the US imposed a naval blockade of Iranian ports, destabilizing energy markets and intensifying regional hostilities. The move has increased pressure on the Strait of Hormuz, which is a vital route for global oil shipments. Washington said the sanctions would target vessels linked to Iranian maritime activities, while transit to non-Iranian ports would continue to be permitted to minimize broader disruption. However, Tehran rejected this pressure and warned of retaliatory action, which deepened the uncertainty in the market.
RBI cautioned against external risks
At its Monetary Policy Committee meeting in April, the Reserve Bank of India said that although India’s macroeconomic fundamentals remain strong, external shocks could intensify if global tensions persist or escalate. Reserve Bank of India Governor Sanjay Malhotra had said that the fundamentals of the Indian economy are now in a stronger position than before, due to which its ability to withstand shocks (resilience) has increased. The economy is facing supply-side shocks. It would be wise to keep an eye on the changing situation and the emerging growth-inflation scenario and wait.
Change in base year
This is the third inflation figure under the revised CPI framework. In this framework, the base year has been changed from 2012 to 2024, and the consumption basket has also been revised to better reflect current spending patterns. Under the new series, the total weight of foods and beverages has dropped from 45.9 percent to 36.75 percent, although it remains the largest part of the index. The share of food items alone is now 34.77 percent.
The weight of categories related to home, utility and fuel has increased from 16.9 percent to 17.7 percent, while services like transport, communication and household services are now more represented. The updated basket also includes new-age consumer goods such as rural housing, OTT subscriptions, value-added dairy products and digital storage devices, etc. Whereas old categories like VCR and audio cassette have been removed.
RBI’s view on inflation in FY27
The Monetary Policy Committee of the Reserve Bank of India has estimated the CPI inflation rate to be 4.6 percent for FY27. According to quarterly estimates, it will decline to 4.0 percent in Q1, 4.4 percent in Q2, 5.2 percent in Q3 and 4.7 percent in Q4. The core inflation rate is estimated to be 4.4 percent. The Central Bank also said that this is the first time that it has given such detailed quarterly details, which shows the increasing focus on transparency and stakeholder suggestions. Since the last policy review, RBI has said that global uncertainty has increased. Although inflation is largely under control, there is still a risk of it increasing. This also includes potential ‘second-round effects’ if geopolitical pressures continue to increase.