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Retail inflation drops to five-month low of 4.85% in March

Retail inflation in India reached a five-month low of 4.85% in March, primarily due to cooling food prices, and is approaching the Reserve Bank's target of 4%, according to the data released by the National Statistical Office (NSO) on Friday.

The Consumer Price Index (CPI)-based retail inflation was 5.09% in February and 5.66% in March 2023, with the lowest recorded at 4.875% in October 2023.

Inflation in the food basket was 8.52% in March, down from 8.66% in February. However, there was an increase in fruits and vegetables segments in March compared to February. The government has tasked the Reserve Bank to ensure inflation remains at 4%, with a margin of 2% on either side.

The central bank has projected retail inflation at 4.5% for the current fiscal assuming a normal monsoon. Geopolitical tensions pose an upside risk to commodity prices and supply chains. The RBI projected inflation at 4.9% for the April-June quarter and 3.8% for the September quarter.

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