India’s retail inflation INCPIY:ECI rose to 3.40% year-on-year in March, up from 3.21% in February, according to government data released on Monday. The figure came slightly below a Reuters poll estimate of 3.48%.
Economists said the rise reflects early signs of higher input costs, particularly in energy-linked components, although the overall inflation trend remains contained.
Kunal Kundu, India economist at Société Générale in Bengaluru, said geopolitical tensions in the Middle East, especially concerns over oil supply disruptions through the Strait of Hormuz, have pushed up fuel-related costs. However, he noted that the impact on headline inflation has been limited due to stable retail fuel prices.
Gaura Sengupta, economist at IDFC First Bank in Mumbai, said producers have largely absorbed higher input costs so far, with minimal pass-through to consumers. She added that any significant price pressures are likely to emerge in the coming months.
Sujit Kumar, chief economist at NABFID, said food prices were the main driver of the March uptick, while core inflation remained steady at 3.7%, indicating contained underlying pressures despite global uncertainties.
Sakshi Gupta, principal economist at HDFC Bank, described the inflation reading as “benign” and below expectations, suggesting the Reserve Bank of India has room to maintain its current policy stance. She noted that sustained energy price pressures could eventually be passed on to consumers.
Vikram Chhabra of 360 ONE Asset said inflation may gradually increase as higher input costs from the West Asia crisis begin to feed into consumer prices. He also pointed to early signs of price revisions across several sectors, including FMCG, cement, paints, and consumer durables.
Radhika Rao, senior economist at DBS Bank, said March inflation reflected the first round of price pressures linked to the Middle East tensions, but core inflation remaining below 4% reduces the need for a tighter monetary stance in the near term.
Upasna Bhardwaj, chief economist at Kotak Mahindra Bank, said the inflation trajectory is likely to edge higher in the coming months, though the Reserve Bank of India is expected to maintain policy rates for now as it assesses growth and inflation risks.
Overall, economists expect inflationary pressures to build gradually but remain within a manageable range, with global energy markets and monsoon conditions seen as key risks ahead.