March CPI inflation rises marginally to 3.40% in first data after start of US-Iran war

March CPI inflation: The Consumer Price Index (CPI) inflation for the month of March 2026 rose marginally to 3.40%, up from 3.21% in February. The annual inflation rate, measured by the All India Consumer Price Index with base year 2024, stood at 3.40% (provisional) in March 2026 compared to March 2025. Rural inflation was recorded at 3.63%, while urban inflation came in lower at 3.11%.Food inflation, based on the All India Consumer Food Price Index (CFPI), was 3.87% (provisional) for March 2026 on a year-on-year basis. The rate was slightly higher in rural areas at 3.96%, compared to 3.71% in urban regions.Housing inflation for March 2026 was estimated at 2.11% (provisional). Within this, rural housing inflation stood at 2.54%, whereas urban housing inflation was lower at 1.95%.The top 5 items with low inflation at all India combined level were; onions (-27.76%), potato (-18.98%), garlic (-10.18%), archer & tur (-9.56%), peas & chickpeas (-7.87%).The top 5 items with high inflation at all India combined level were; silver jewellery (148.61%), Gold/Diamond/Platinum Jewellery (45.92%), Coconut: copra (45.52%), tomato (35.99%), cauliflower (34.11%).Commenting on the data, Radhika Rao, Executive Director and Senior Economist at DBS Bank said, “March inflation numbers were modestly higher, signalling the first round of price pressures in the wake of the Middle East crisis. Input costs were selectively passed on to end consumers, while food prices continued to normalise. Precious metals have come off the boil, though they remain up double digits on a year‑to‑date basis. We expect the impact of higher energy prices to gradually percolate over the coming months, as replacement supplies arrive with a lag. At the same time, we continue to monitor the risk of a fuel price increase in the weeks ahead. Core inflation, meanwhile, remained below 4%, reducing the need for the central bank to adopt a hawkish stance in the near term. The impact of higher oil and gas prices is likely to be more material in the WPI index.”RBI has a target of 4% CPI inflation with a 2% margin either way, making the board target inflation range between 2-6%. The CPI inflation has been within RBI's comfort zone for some months now. However inflationary pressures from rising global crude oil prices may keep the central bank on a wait-and-watch mode in terms of any further policy rate cuts.