Retail inflation rose to 5.52 per cent in March, government data showed on Monday. This inflation was mainly on account of higher food prices. The consumer price index (CPI) based on retail inflation stood at 5.03 per cent in February.
The rate of price rise in the food basket accelerated to 4.94 per cent in March, as against 3.87 per cent in the preceding month and inflation in the 'fuel and light' category was 4.5 per cent during the month vis-a-vis 3.53 per cent in February, as per data released by the National Statistical Office (NSO).
Earlier this month, the Reserve Bank of India had projected the retail inflation at 5 per cent in the January-March quarter of 2020-21 and 5.2 per cent in the first two-quarters of the current fiscal.
After breaching the upper tolerance threshold of 6 per cent for six consecutive months (June-November 2020), CPI inflation fell in December 2020 and eased further in January 2021 to 4.1 per cent on the back of a sharp correction in vegetable prices and softening of cereal prices. However, it rebounded to 5 per cent in February, driven primarily by base effects.
The Reserve Bank, which mainly factors in the retail inflation while arriving at its monetary policy, has been asked to keep CPI inflation at 4 per cent with a margin of 2 per cent on either side. The central bank retained the key lending rate (repo) in its last monetary policy citing inflationary concerns.