India’s inflation eases to 3.34% in March 2025, the lowest since August 2019

India witnessed a notable easing in inflation during March 2025, with the all-India Consumer Price Index (CPI) indicating a year-on-year (YoY) headline inflation of 3.34% (provisional). This marks a decline of 27 basis points from 3.61% in February 2025, and more significantly, it's the lowest year-on-year (YoY) inflation recorded since August 2019. The drop was largely attributed to a broad-based moderation in food prices, especially in vegetables, eggs, pulses, cereals, and milk products.

Let's break down the inflation trends sector-wise and by region to get a clearer picture.

Rural and urban inflation trends

Inflation data for March shows a contrasting trend between rural and urban areas. The rural CPI inflation dropped sharply from 3.79% in February to 3.25% in March 2025. The food inflation for the rural sector saw an even steeper decline, from 4.06% in February to 2.82% in March, showcasing easing pressure on essential food commodities.

Meanwhile, urban inflation saw a marginal uptick. The headline CPI inflation for urban areas rose slightly from 3.32% in February 2025 to 3.43% in March 2025. However, this increase was offset by a sharp fall in urban food inflation, which dropped to 2.48% from 3.15% in February. This indicates that while non-food items may have nudged up prices slightly in cities, the drop in food costs provided much-needed relief.

On a monthly basis, the combined CPI index dropped 0.26%, while the CFPI index, which reflects food inflation, decreased by 0.86%, pointing to a deflationary trend in food items during March.

Food inflation and sectoral breakdown

The Consumer Food Price Index (CFPI) for March 2025 registered a YoY inflation of 2.69%, a steep fall of 106 basis points compared to February's 3.75%. It is also the lowest food inflation level since November 2021, a significant indicator of easing price pressures in the food basket.

Food and beverages, which hold substantial weight in the CPI basket, saw an inflation rate of 2.88% with a provisional index value of 196.2. The dip in prices for vegetables, pulses, and dairy items played a key role in this moderation.

Among major food items, ginger (-38.11%), tomato (-34.96%), cauliflower (-25.99%), jeera (-25.86%), and garlic (-25.22%) witnessed the steepest declines. Conversely, some items recorded sharp price increases — coconut oil (56.81%), coconut (42.05%), and grapes (25.55%) led the list of items with the highest YoY inflation.

Other major CPI components showed moderate inflation:

1. Pan, tobacco, and intoxicants: 2.48%
2. Clothing and footwear: 2.62%
3. Housing (Urban only): 3.03%
4. Fuel and light: 1.48% (up from -1.33% in February)
5. Education: 3.98%
6. Health: 4.26%
7. Transport and communication: 3.30%

It's worth noting that while health and education inflation remain slightly elevated, their growth is stable. The rise in fuel and light inflation also signals a return to positive territory after being negative in February, possibly reflecting global oil price fluctuations.

Summing up

March 2025 saw inflation in India ease to 3.34%, the lowest since August 2019, driven by a sharp fall in food prices, especially vegetables and dairy products. The decline was more prominent in rural areas, where both general and food inflation dipped significantly. Urban areas experienced a mild rise in overall inflation but benefitted from a drop in food-related prices. 

Sector-wise, inflation remained under control across most essential goods, with fuel rebounding into positive territory and health and education costs seeing slight increases. This moderation in inflation offers a welcome respite for consumers and hints at a stable economic environment heading into the next quarter.