India's retail inflation drops to 15-month low of 5.66% in March 2023

However, the rate of price rise in spices was high at 18.2 percent in March, followed by 'cereals and products' by 15.27 percent. Fruits too were expensive.

The overall inflation in the food basket was 4.79 percent in March against 5.95 percent in February and 7.68 percent in the year-ago period. The food basket has a weightage of 54.18 percent in the overall CPI.

The retail inflation rose from 5.7 percent in December 2022 to 6.4 percent in February 2023 on the back of higher inflation in cereals, milk, and fruits and slower deflation in vegetable prices. Except for November and December 2022, retail inflation has remained above the RBI's upper tolerance level of 6 percent since January 2022.

Last week, Reserve Bank of India (RBI) governor Shaktikanta Das said the war against inflation has to continue until the central bank sees a durable decline in it closer to the target. "We stand ready to act appropriately and on time. We are confident that we are on the right track to bring down inflation to the target rate over the medium term," Das said.

The central bank has projected retail inflation at 6.5 percent for 2022-23, with the January-December quarter at 5.7 percent. The central bank has been mandated by the government to ensure the retail inflation remains at 4 percent with a margin of 2 percent on either side.

To contain the rising prices, the RBI has hiked interest rates by 250 basis points since May last year. The latest rate hike of 25 basis points in February took the benchmark policy rate to 6.50 percent.