In a significant economic development, India's headline inflation dropped to 3.34% in March 2025 — the lowest annual rate since August 2019. The data, released by the National Statistics Office (NSO), highlights a notable cooling in price pressures across rural and urban sectors, especially in essential food categories.
March 2025 saw a 27 basis point fall in overall Consumer Price Index (CPI) inflation compared to February 2025, when it stood at 3.61%. Food inflation, based on the Consumer Food Price Index (CFPI), dropped even more dramatically to 2.69% from 3.75% the previous month — a sharp 106 basis point fall. This marks the lowest food inflation rate since November 2021.
The rural segment observed a more significant drop, with general CPI inflation at 3.25% (down from 3.79%) and food inflation at 2.82% (down from 4.06%). Meanwhile, urban inflation saw a slight uptick in overall CPI from 3.32% to 3.43%, but food inflation dipped from 3.15% to 2.48%.
Key Contributors to the Inflation Decline
The deceleration in price growth was largely driven by declining prices in several food and essential commodities. These included:
- Vegetables
- Eggs
- Pulses and products
- Meat and fish
- Cereals and products
- Milk and products
Monthly changes reinforce this trend — general CPI saw a combined drop of 0.26% from February to March 2025, and CFPI saw a 0.86% decline.
Sectoral Snapshot: Inflation in Key Categories
- Housing: Registered a mild year-on-year inflation of 3.03%, marginally up from 2.91% in February.
- Fuel & Light: Inflation rebounded to 1.48% in March from a deflation of -1.33% in February.
- Education: Inflation stood at 3.98%, up slightly from 3.83%.
- Health: Prices in this segment rose by 4.26%, compared to 4.12% in the previous month.
- Transport & Communication: Registered 3.30% inflation, increasing from 2.93%
What's Getting Costlier and What’s Cheaper?
Among all items in the CPI basket, coconut oil showed the highest year-on-year inflation at a staggering 56.81%, followed by:
- Coconut (42.05%)
- Gold (34.09%)
- Silver (31.57%)
- Grapes (25.55%)
Conversely, some food items experienced significant deflation:
- Ginger (-38.11%)
- Tomato (-34.96%)
- Cauliflower (-25.99%)
- Jeera (-25.86%)
- Garlic (-25.22%)
State-Wise Highlights
Kerala topped the chart among major states with a population over 50 lakhs, recording a combined inflation rate of 6.59%, followed by Karnataka (4.44%), Chhattisgarh (4.25%), Jammu & Kashmir (4.00%), and Maharashtra (3.86%).
Looking Ahead
The next set of CPI data, for April 2025, will be released on May 12, 2025. With inflation at a five-year low, this signals positive news for policymakers and consumers alike. If this trend continues, it could provide the Reserve Bank of India with room to maneuver on interest rates, potentially boosting economic growth further.
Disclaimer:
The information provided in this blog is based on official data released by the National Statistics Office (NSO) of India and is intended for informational purposes only. While every effort has been made to ensure accuracy, readers are advised to verify facts independently and consult relevant financial or policy experts before making any decisions based on this content. The blog does not constitute financial or investment advice.
