Food inflation stood at 3.73 per cent in March compared with 3.35 per cent in February.
Economists expect the RBI’s policy stance to remain accommodative in June.
The Reserve Bank of India on Tueday cut its policy interest rate by a quarter percentage point, lowering it to a more than five-year low while dangling the prospect of another cut later this year if inflation trends stay benign.
Moody’s said a moderate growth in India, spare capacity in industry and low global commodity prices will help maintain inflation around the current levels.
While national elections are three years away, the BJP’s popularity faces earlier tests, with ballots in states including West Bengal and Assam months away, and the key battleground of Uttar Pradesh due next year.
The fall in wholesale prices inflation is in divergence with the rise in retail inflation for January. Consumer Price Index (combined)-based inflation rose to a 17-month high of 5.69 per cent in January.
This is the 15th straight month since November 2014 that deflationary pressure persisted and wholesale inflation has remained in the negative zone.
The RBI Governor was replying to a question from a Dosa- loving engineering student at a Federal Bank event in Kochi last night.
Retail inflation, as measured by the Consumer Price Index (CPI), stood at 5.61 per cent in December 2015 and 5.19 per cent in January 2015.
The Reserve Bank of India (RBI) on Tuesday kept key policy rates unchanged, awaiting further data on inflation and the unveiling of the Union Budget scheduled for later this month.
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Food inflation shot up to 8.17 per cent in December as against 5.20 per cent in the previous month.
The Wholesale Price Index-based inflation has been rising for three months in a row and was (-)3.81 per cent in October.
With the possibility of banks reducing their offering on deposits and inflation always threatening to come back, the instrument is far from losing its relevance.