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Lower Inflation print to drive interest rates lower


CPI inflation came down further to 3.3% in March as against 3.6% in February. It is lower than market expectation of around 3.6%. Last 2-3 months CPI print has come below market expectations by around 20bps to 30bps.
The trend of lower food inflation continues with March CFPI coming at 2.7% as compared to 3.8% in February. In last 5 months, Food inflation has come down sharply from 10.9% in October 2024 to less than 3% in March 2025. Vegetables inflation witnessed a de-growth of (-)7% as compared to -1.0% in February and remain a major contributor for lower inflation. Both higher base and continuous decline on month-on-month basis since last 5 months is driving food inflation lower. Apart from vegetables, pulses and spices also continue to de-grow with negative inflation of -2.7% and -4.9% respectively. Heavyweight cereal with 10% weight is also steadily shifting down (6% in March from 8.7% in June 2024) and positive outlook (normal monsoon).
Core inflation came marginally higher at 4.1% in March as against 4.05 in February largely driven by Gold prices (personal care and effects inflation at 13.5%). Ex-Gold, all other components has inflation in the range of 2.0% to 4.3% (comfortable range for RBI).
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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