India’s inflation falls to cooler-than-expected 3.34% in March

India’s annual inflation rate fell to a lower-than-expected 3.34% in March, the country’s Ministry of Statistics and Programme Implementation reported Tuesday.

The reading fell for a fifth straight month and came in slightly below the 3.61% seen in February, as growth in food prices continued to soften. Economists polled by Reuters had expected a reading of 3.6%.

Food inflation, which is a key constituent of the country’s consumer price index, hit 2.69%. The decline was led by a fall in prices for vegetables, spices, eggs and pulses.

The inflation data follows a second straight interest rate cut by the Reserve Bank of India at its meeting on April 9, bringing its policy rate to 6% amid growth concerns in the world’s fifth largest economy.

The RBI estimates inflation at 4% — at the midpoint of its target range of 2% to 6% — for financial year ending March 2026, although it noted that core inflation in February — which excludes food and fuel prices — spiked to a 15-month high of 4.1%, driven mostly by an uptick in gold prices.

“There has been a substantial and broad-based seasonal correction in vegetable prices. The uncertainties on rabi [winter] crops have abated considerably ... Along with robust kharif [autumn] arrivals, this is expected to set the stage for a durable softening in food inflation,” the central bank said last week.