Lower March 2023 CPI and CFPI brought inflation within RBI’s tolerance band first time in 15 months

The March 2023 CPI and CFPI data released by the NSO of the Union government's MoSPI shows the lowest inflation rate in 15 months.

Fall in March 2023 CPI and CFPI

Photo: Unsplash/Mediocre Studio

The National Statistical Office (NSO), under the Union Ministry of Statistics and Programme Implementation (MoSPI), has released the consumer price index (CPI) and consumer food price index (CFPI) data for March 2023 on Wednesday, April 12th. The March 2023 CPI and CFPI data showed a downward trend, for the first time since January 2022.

According to the NSO’s March 2023 CPI and CFPI data, the combined CPI (including urban and rural areas) fell from 6.44% in February 2023 to 5.66% in March 2023, bringing the inflation rate within the tolerance band of 6% set by the Reserve Bank of India, the country’s central bank. In March 2022, the combined CPI stood at 6.95%.

The combined CFPI rate fell from 5.95% in February 2023 to 4.79% in March 2023. Last year, the combined CFPI rate stood at 7.68% in March, which was extremely high and alarming. Inflation remained above 6% band from January 2022 onwards, except for November and December 2022.

The urban CPI for March 2023 fell to 5.89% vis-à-vis 6.1% in February. In March 2022, urban CPI stood at 6.12%. There was a steep decline in rural CPI as well. The rural CPI fell from 6.72% in February 2023 to 5.51% in March 2023. In March 2022, rural CPI stood at 7.66%.

Urban CFPI fell from 5.09% in February 2023 to 4.82% in March 2023. In March 2022, urban CFPI was 7.04%. Rural CFPI had a steep fall too. It fell from 6.6% in February 2023 to 4.66% in March 2023; a whopping 1.94 percentage point fall. In March 2022, the rural CFPI was 8.04%.

The following charts represent the fall in the March 2023 CPI and CFPI.

March 2023 CPI and CFPI data

CPI of March 2023

Source: NSO

CFPI data

Source: NSO

As the inflation rate remains within the RBI’s prescribed tolerance level of 6%, therefore, any change in the interest rates is unlikely in the coming days. Incidentally, the RBI decided earlier this month to not change the repo rate from 6.50%.

Coupled with the information and technology giant Tata Consultancy Services (TCS) posting huge profits in its fourth quarter (Q4) results, the data of March 2023 CPI and CFPI, showing 15-month low inflation, helped the BSE Sensex and Nifty to extend their rally for the eighth straight session on Wednesday.

India’s industrial production index (IIP) data released on Wednesday also highlighted an impressive picture. The IIP rose to 5.6% in February 2023 vis-a-vis 1.2% in February 2022.

According to the NSO, the price data for CPI and CFPI are collected from selected 1,114 urban and 1,181 village markets covering all States and Union territories through personal visits by field staff of the Field Operations Division of the NSO, MoSPI, on a weekly roster.

For March 2023 CPI and CFPI data, the NSO reportedly collected prices from 100% villages and 98.5% urban markets while the market-wise prices reported therein were 90.4% for rural and 93.4% for urban areas.

The April 2023 CPI and CFPI data will be released by the NSO on May 12th 2023.

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