Retail inflation rises to 3.40 per cent in March on food prices; remains below RBI target

India’s retail inflation rose to 3.40 per cent in March from 3.21 per cent in February, led by an uptick in food prices, according to government data released on Monday (April 13).

Below RBI target

The headline print remained below the Reserve Bank of India (RBI) 4 per cent target and within its tolerance range of 2 per cent to 6 per cent. It also came in lower than the 3.48 per cent estimate in a Reuters poll, indicating a softer-than-expected reading despite the monthly increase.

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Food inflation stood at 3.87 per cent in March, compared with 3.47 per cent in the previous month, reflecting firmer prices across key items in the consumption basket.

West Asia risks build

Uncertainty around a fragile two-week ceasefire in West Asia continued after President Donald Trump said the US Navy would begin blocking ships moving to and from Iran via the Strait of Hormuz, a critical chokepoint that handles a significant share of global oil shipments.

The move followed unsuccessful attempts to secure a deal to end the conflict and raised concerns over potential escalation involving regional powers.

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According to media reports, any sustained disruption in the Strait could tighten supply conditions sharply, as alternative routes remain limited and shipping costs could rise alongside insurance premiums for vessels operating in the region.

Crude prices rose more than 7 per cent to $100 a barrel amid fears that the blockade could further restrict Iranian exports and unsettle broader supply chains.

Exposure and RBI outlook

India, which depends on imports for nearly 90 per cent of its oil needs, is particularly exposed to prolonged disruptions in global energy flows and sustained increases in prices, with higher fuel costs typically feeding into transport, manufacturing and retail inflation.

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The RBI last week left its benchmark policy rate unchanged, warning that the Middle East crisis could push inflation higher and weigh on growth, reversing a "Goldilocks" phase for the South Asian economy.

In its initial projections for the current financial year, the RBI expects GDP growth to ease to 6.9 per cent in 2026-27 from an estimated 7.6 per cent in the year ended March 31. Average inflation is projected at 4.6 per cent for the ongoing fiscal year.

(With agency inputs)