India's retail inflation eased to 3.34% in March 2025, marking the lowest rate since August 2019. This decline was primarily driven by a significant drop in food prices, with food inflation falling to 2.69%—the lowest since November 2021. Notably, vegetable prices decreased by 7.04% year-on-year, contributing to the overall moderation in consumer prices.

The Reserve Bank of India (RBI) has already reduced its key policy rate twice this year and shifted to an accommodative monetary stance. The current inflation trend provides additional room for the central bank to implement further rate cuts to stimulate economic growth.

Analysts anticipate that favorable monsoon forecasts for 2025 will support agricultural output, potentially leading to continued stability in food prices and maintaining inflation near the RBI's 4% target. This environment may facilitate further monetary easing to bolster domestic demand amid global economic uncertainties.

Core inflation, which excludes food and energy prices, edged up to 4.1% in March from 3.9%-4.0% in February, indicating moderate underlying price pressures.

Overall, the current inflation landscape presents an opportunity for the RBI to continue its accommodative policy approach to support India's economic growth trajectory.