India's Inflation Steady at 3.6% in March After Four Months of Decline

Consumer prices in India probably increased at a comparable rate in March to February after four months of decreasing inflation, as a significant jump in gold prices balanced out stable food prices, according to a Reuters survey.

Food price increases had gradually slowed over the last four months but probably reached their lowest point in March, as the nation's agricultural sector faced inconsistent rainfall and heat waves.

The most recent Reuters survey of 40 economists conducted from April 3 to April 8 indicated that inflation, measured by the yearly variation in the consumer price index, stood at 3.60 percent in March, nearly unchanged from 3.61 percent in February.

"We are expecting very flattish inflation for March," said Indranil Pan, chief economist at Yes Bank.

"Vegetable prices have come down, though the drop is less on a month-on-month basis than we have seen in January and February... (but) higher gold prices will likely limit the fall in core inflation."

Gold prices increased by more than 7 percent in March as investors looked for a safe haven, preparing for U.S. President Donald Trump's extensive trade tariffs.

Core inflation, which omits the less stable food and energy sectors, was anticipated to have risen to 4.1 percent year-on-year in March from February's projected 3.9 percent to 4.0 percent.

However, with inflation firmly inside the Reserve Bank of India's 2-6 percent target, the central bank is anticipated to lower interest rates on April 9 and again in August to aid the already decelerating economic growth.

At the same time, alerts from the India Meteorological Department regarding national heat waves have heightened worries about inflationary pressures.

"As weather turns less supportive, and temperatures rise during summer months, vegetable and fruit prices are expected to start climbing seasonally," wrote Rahul Bajoria, head of India and ASEAN Economic Research at BofA Global Research.

Predictions for the inflation figures, scheduled for release on April 15 at 1030 GMT, varied between 3.2 percent and 3.9 percent.

The survey indicated that inflation based on the wholesale price index is expected to have increased to 2.50 percent in March, up from 2.38 percent in February.