Page 18 - Policy Economic Report_Mar'25

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

o Corresponding inflation rate for rural and urban are 4.06% and 3.20%, respectively.

o Food & Beverages inflation eased by 185 basis points (m-o-m) to 3.84%, mainly due to a
sharp decline in vegetable prices.

o Vegetable CPI declined sharply, entering negative territory (1.07%) for the first time in
20 months. Approximately 80% of this decline was attributed to garlic, potatoes, and
tomatoes.

o Fruit inflation surged to a 10-year high of 14.8%, potentially due to increased demand
during fasting periods associated with the Maha Kumbh.

? Fuel and light- Deflation is continued for 18 months at -1.33%. It is combined inflation rate for
both rural and urban sector.

? Urban Inflation: Significant decline from 3.87% in January, 2025 to 3.32% (Provisional) in
February, 2025 is observed in headline inflation of urban sector.

? Housing Inflation: Year-on-year Housing inflation rate for the month of February, 2025 is 2.91%.
Corresponding inflation rate for the month of January, 2025 was 2.82%. The housing index is
compiled for urban sector only.

? Health Inflation: Year-on-year Health inflation rate for the month of February, 2025 is 4.12%.
Corresponding inflation rate for the month of January, 2025 was 3.97%. It is combined health
inflation for both rural and urban sector.

? Transport & Communication: Year-on-year Transport & communication inflation rate for the
month of February, 2025 is 2.87%. Corresponding inflation rate for the month of January, 2025
was 2.76%. It is combined inflation rate for both rural and urban sector.

Future CPI Inflation Trends

? CPI inflation is expected to decline to 3.9% in Q4 FY25 and average 4.7% for FY25.

? FY26 inflation is projected in the range of 4.0-4.2%, while core inflation may range between 4.2-
4.4%.

? The Reserve Bank of India (RBI) may implement successive rate cuts in April and August 2025,
with an overall expected cumulative rate cut of at least 75 basis points.

? The cycle of rate cuts may continue from October 2025, following an intervening gap in August
2025.

State-wise Inflation Analysis

? 12 states recorded rural inflation above the national rural average.

? 10 states reported urban inflation higher than the national urban average.

March 2025 Page | 17