India's retail inflation eased to 3.40% in March 2026, remaining below the Reserve Bank's medium-term target of 4% for over a year, according to official data released by the Ministry of Statistics and Programme Implementation. The inflation rate was calculated based on the Consumer Price Index (CPI) and showed improvement from previous months. As reported by Upstox, inflation in rural areas was higher at 3.63%, while urban inflation stood at 3.11% during the month.
Food inflation, measured by the Consumer Food Price Index (CFPI), came in at 3.87% in March, with rural and urban rates at 3.96% and 3.71% respectively. Housing inflation for the month was recorded at 2.11%, with rural inflation at 2.54% and urban at 1.95%. According to the provisional data, these sectoral inflation rates provided context for the overall retail inflation performance.
Despite a spike in crude oil prices following the US-Iran conflict, domestic retail inflation has remained largely stable after the government cut taxes on petrol and diesel to protect consumers. As reported by Upstox, RBI Governor Sanjay Malhotra noted in his monetary policy statement that although retail prices of petrol and diesel have remained unchanged, the pass-through of higher global energy prices has resulted in some increase in prices of a few items. The central bank has projected retail inflation at 4.6% for the current financial year.
The Reserve Bank of India, which last week kept its key policy rate unchanged, warned that risks are tilted to the upside due to rising global energy prices and weather-related uncertainties. According to the central bank's assessment, the possible emergence of El Niño weather conditions could pose risks to the inflation trajectory. The RBI expects food prices to remain comfortable in the near term, supported by strong rabi crop output, adequate reservoir levels and sufficient buffer stocks of food grains.
