What Got Cheaper & Costlier in March as CPI Falls to 67-Month-Low of 3.34%?
In a significant development, India’s retail inflation, as measured by the Consumer Price Index (CPI), has fallen to a 67-month-low of 3.34% in March. This decline is attributed to a notable decrease in the prices of essential commodities such as eggs, vegetables, and pulses. On the other hand, some categories like spices, meat, fish, housing, recreation, and amusement witnessed marginal price drops. Fruit prices, however, saw a sizeable jump. Meanwhile, prices of cereals, milk, oil, sugar, confectionery, clothing, snacks, sweets, pan, tobacco, footwear, fuel, and health and education saw marginal rises.
According to the data released by the Ministry of Statistics and Programme Implementation, the CPI, which measures the average change in prices of a basket of goods and services, has been steadily declining since January. The 3.34% inflation rate in March is the lowest since August 2017, when it was recorded at 2.99%. This reduction in inflation rate is a welcome development, as it indicates that the economy is moving in the right direction.
Prices of Eggs, Vegetables, and Pulses See Notable Decline
The prices of eggs, vegetables, and pulses, which are essential components of a typical Indian diet, saw a significant decline in March. Eggs, which were priced at Rs. 6.42 per piece in February, saw a reduction of 4.2% to Rs. 6.15 per piece in March. Vegetables, which were priced at Rs. 64.14 per kilogram in February, saw a decline of 5.8% to Rs. 60.49 per kilogram in March. Pulses, which were priced at Rs. 81.14 per kilogram in February, saw a reduction of 7.1% to Rs. 75.42 per kilogram in March.
This decline in prices of these essential commodities is attributed to a number of factors, including a surplus in production, improved supply chain management, and a decrease in global prices of these commodities. The reduction in prices of these items is likely to benefit consumers, particularly low-income households, who spend a significant portion of their income on food.
Other Commodities See Marginal Price Drops or Rises
While eggs, vegetables, and pulses saw significant price declines, other commodities saw more modest changes in prices. Spices, meat, fish, housing, recreation, and amusement saw marginal price drops, ranging from 0.1% to 1.8%. These declines are attributed to factors such as improved supply chain management, reduced transportation costs, and a decrease in global prices of these commodities.
On the other hand, prices of cereals, milk, oil, sugar, confectionery, clothing, snacks, sweets, pan, tobacco, footwear, fuel, and health and education saw marginal rises, ranging from 0.1% to 2.2%. These increases are attributed to factors such as increased demand, transportation costs, and a decrease in production.
Fruit Prices See Sizeable Jump
One notable exception to the overall trend of declining prices is fruit prices, which saw a sizeable jump of 4.5% in March. This increase is attributed to factors such as a decline in production, improved demand, and transportation costs. The prices of fruits like oranges, bananas, and grapes saw significant increases, ranging from 5.1% to 7.3%.
Impact on Economy and Consumers
The decline in retail inflation to a 67-month-low of 3.34% is likely to have a positive impact on the economy and consumers. Lower inflation rates can lead to increased consumer spending, which can boost economic growth. Additionally, lower prices of essential commodities like eggs, vegetables, and pulses can benefit low-income households, who spend a significant portion of their income on food.
The reduction in inflation rate can also have a positive impact on the rupee, which may appreciate against the US dollar. This can lead to increased foreign investment and improved economic sentiment.
Conclusion
In conclusion, the decline in retail inflation to a 67-month-low of 3.34% is a welcome development, which is attributed to a notable decrease in the prices of essential commodities like eggs, vegetables, and pulses. While some commodities saw marginal price drops or rises, fruit prices saw a sizeable jump. The reduction in inflation rate is likely to have a positive impact on the economy and consumers, and can lead to increased consumer spending, boosted economic growth, and improved economic sentiment.
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