March retail inflation drops to 4.83

Zee Media Bureau

New Delhi: Showing some signs of relief, retail inflation felt for the second straight month to 4.83 percent in March as compared to 5.18 percent in February.

Food inflation eased slightly to 5.21 percent in March from 5.30 percent in the previous month.

Rural inflation declined to 5.70 percent versus 6.05% in February while urban inflation came down to 3.95% versus 4.30% in February.

Reserve Bank had last week cut the key interest rate by 0.25 per cent and introduced a host of measures to smoothen liquidity supply so that banks can lend to the productive sectors and indicated accommodative stance going ahead.

A Prasanna, Economist, ICICI Securities Primary Dealership said, "The downside surprise from food inflation has sustained. If monsoon turns out good, then some disinflation in pulses will continue. However, services inflation remains sticky, which will prevent inflation from sustaining below 5 percent.

"In terms of monetary policy we do not expect any action from the RBI as inflation has to consistently print below 5 percent for the central bank to be convinced that its inflation target will be achieved. Inflation excluding petrol still remains sticky at 5.1 percent.

"IIP (industrial output) number is definitely positive but capital goods output continues to be disappointing which raises a question mark on the sustainability of the recovery unless investment demand picks up."