Food price increases have steadily eased over the past four months, but could bottom out in March as the country’s agricultural sector experienced uneven rainfall and heat waves.
The latest Reuters poll of 40 economists from April 3 to 8 showed inflation measured by annual changes in the consumer price index was 3.60% in March, about 3.61% in February.
“We expect inflation in March to be very candid,” said Indranil Pan, chief economist at Yes Bank.
“Vegetable prices have fallen, although the monthly decline is more than what we saw in January and February… (but) gold prices may limit the decline in core inflation.”
Gold prices rose more than 7% in March as investors seek safe havens support for a large amount of trade tariffs by U.S. President Donald Trump. Core inflation, excluding volatile food and energy components, is expected to rise to 4.1% in March from February’s estimate of 3.9% to 4.0%. But with inflation within the Reserve Bank of India’s 2-6% target range, the central bank is expected to lower interest rates on Thursday and again in August to support the pace of slowing economic growth.
Meanwhile, India’s meteorological department’s warnings about national heat waves have raised concerns about inflationary pressures.
“As the weather has less impact and the temperatures in summer rise, the prices of vegetables and fruits are expected to climb from the season,” wrote Rahul Bajoria, head of India’s BOFA Global Research.
The forecast for inflation data is scheduled for April 14, with GMT at 1030, ranging from 3.2% to 3.9%.
The survey shows that inflation based on the wholesale index may rise to 2.50% from 2.38% in February.
