India’s retail inflation just hit a 67-month low of 3.34% in March, dipping below the RBI’s 4% target for the second month running. Food prices, the usual culprit, stayed tame at 2.69%, down from 2.75% in February, helping drag the yearly average for FY25 to 4.6%—a full point below FY24’s 5.4%. Sounds like a win, right? Not so fast. While the headlines scream relief, the fine print tells a messier story, and ordinary Indians aren’t exactly feeling the breeze.
Let’s start with the good. Cheaper veggies, eggs, and pulses deserve a nod for cooling food inflation. A high base effect from last year’s numbers also gave the stats a flattering glow, and this optical illusion might keep things looking rosy for another few months. The RBI, clearly chuffed, used this wiggle room to flip to an accommodative stance and snip the repo rate in April. DBS Bank’s Radhika Rao sees more cuts coming, maybe as early as June, if the trend holds.
But here’s the rub: not everything’s cheap. Core inflation—think stuff like transport, education, and gold—is still sticky at 4.1%. Personal care products are outright gouging wallets, clocking a wild 13.5% spike, per Bank of Baroda’s Madan Sabnavis. Edible oils (17%) and fruits (16.2%) aren’t doing us any favors either, juiced up by global prices and a wobbly rupee. And don’t forget LPG prices jumped 8% this month—expect that to nibble at April’s numbers.
Then there’s the geography of it. Kerala’s grappling with a scorching 6.6% inflation, while Delhi and Telangana are chilling at 1.5% and 1.1%. Maharashtra, Tamil Nadu, and others hover above the national average. Rural and urban gaps are narrowing, sure, but that’s cold comfort when your grocery bill still feels like a shakedown.
The RBI’s patting itself on the back, and maybe it should—hitting that 4% target is no small feat. But let’s not kid ourselves: low inflation doesn’t mean low prices. It just means prices aren’t rising as fast. For the average Joe, that’s academic when salaries are flat and input costs are pushing up everything from soap to cooking oil. Banks might cheer cheaper borrowing, but savers—already bruised by shrinking FD rates—are stuck watching their returns erode.
What’s next? The RBI’s got room to ease further, and Sabnavis bets on another 50 basis points off the repo rate if FY26 stays this calm. But leaning too hard on rate cuts risks fanning core inflation, especially with global shocks (oil, anyone?) lurking. Tax breaks on essentials or smarter supply chain fixes could do more than tweaking rates, but that’s a tougher sell.
This 3.34% is a milestone, not a miracle. It’s a chance to rethink how we shield wallets from the next spike, not a cue to declare victory. For now, the RBI’s got its tailwind, but Indians are still waiting for the real relief to hit home.