What Got Cheaper & Costlier in March as CPI Falls to 67-Month-Low of 3.34%?
India’s retail inflation, as measured by the Consumer Price Index (CPI), has been on a downward trend in recent months. In March, the CPI fell to a 67-month-low of 3.34%, marking a significant decline from the previous month’s 3.81%. This development has led to changes in the prices of various commodities, with some seeing significant declines, while others have experienced marginal increases.
What Got Cheaper?
Eggs, vegetables, and pulses were among the commodities that saw a considerable decline in prices in March. According to data released by the Ministry of Statistics and Programme Implementation, the prices of eggs fell by 6.3% year-on-year (YoY), while vegetables and pulses registered a decline of 4.4% and 3.1%, respectively. These declines are likely due to a bumper harvest and improved supply chain management.
Spices, meat, fish, and housing also saw prices drop marginally in March. Spices, which are a significant part of Indian cuisine, registered a decline of 0.4% YoY, while meat, fish, and poultry products saw a drop of 0.3% YoY. Housing costs, which are a significant component of the CPI, also saw a marginal decline of 0.1% YoY.
Recreation and amusement expenses, such as movies, tourism, and leisure activities, also saw a decline in prices in March. This is likely due to a decrease in demand during the pandemic, which has led to reduced prices for these services.
What Got Costlier?
Fruit prices, on the other hand, saw a significant jump in March. The prices of fruits like bananas, apples, and oranges rose by 5.5% YoY, 4.1% YoY, and 3.5% YoY, respectively. This increase is likely due to weather-related issues, such as unseasonal rains and heatwaves, which have impacted fruit production and supply.
Cereals, milk, oil, sugar, confectionery, clothing, snacks, sweets, pan, tobacco, footwear, fuel, health, and education expenses also saw marginal rises in March. These increases are likely due to a combination of factors, including supply chain disruptions, transportation costs, and global commodity prices.
Why is the CPI Falling?
The decline in the CPI is largely attributed to a combination of factors, including:
- Lower food prices: A good harvest and improved supply chain management have led to lower prices for essential commodities like vegetables, pulses, and eggs.
- Reduced demand: The ongoing pandemic has led to reduced demand for various goods and services, which has put downward pressure on prices.
- Global commodity prices: Declines in global commodity prices, particularly for oil and other energy-related products, have also contributed to the fall in the CPI.
What Does this Mean for India?
The decline in the CPI is a welcome development for India’s economy, which has been grappling with the challenges posed by the pandemic. A lower CPI can lead to:
- Increased consumer spending: With lower prices for essential commodities, consumers are likely to spend more, which can boost economic growth.
- Reduced inflation: A lower CPI can reduce inflationary pressures, which can help maintain the purchasing power of consumers.
- Improved business confidence: A decline in the CPI can boost business confidence, leading to increased investment and job creation.
Conclusion
In conclusion, the decline in the CPI to a 67-month-low of 3.34% in March is a significant development for India’s economy. While prices of eggs, vegetables, and pulses saw considerable declines, fruit prices and certain other commodities saw marginal increases. As India continues to navigate the challenges posed by the pandemic, a lower CPI can provide a much-needed boost to economic growth and consumer spending.
