India's Inflation Holds Steady in March as Gold Surge Offsets Food Price Relief

Key Takeaways from Reuters Poll:

• CPI Inflation: Expected at 3.60% in March (vs. 3.61% in February), halting a four-month decline.
• Core Inflation: Rises to 4.1% YoY (from 3.9–4.0%) on soaring gold prices (+7% in March).
• Food Prices: Flat after months of moderation, but heatwave risks loom.
• RBI Action: Rate cut expected April 9 amid slowing growth, with another likely in August.

What's Driving the Trend?

1. Gold's Safe-Haven RallyInvestors flocked to gold ahead of Trump's tariffs, pushing prices up 7% in March—adding upward pressure to core inflation.
2. Food Prices Bottom OutVegetable costs fell but at a slower pace than in January/February.Uneven monsoon rains and early heatwaves (per India Meteorological Department) threaten future spikes.
3. Wholesale Inflation Creeps UpWPI likely rose to 2.50% (from 2.38% in February), signaling persistent cost pressures.

Policy Implications

• Rate Cuts Ahead: With inflation comfortably within RBI's 2–6% target, economists expect a dovish pivot to spur growth.
• Summer Risks: BofA warns rising temperatures could push up fruit/vegetable prices, complicating the RBI's easing path.

Quote:
"Gold is the wildcard. If prices stay high, core inflation could defy RBI's comfort zone."
— Rahul Bajoria, BofA Global Research