New Delhi, April 15 : India's annual rate of inflation based on the Wholesale Price Index (WPI) slowed to 2.05 per cent in March, down from 2.38 per cent in February, according to data released by the Ministry of Commerce and Industry on Tuesday.

The positive rate of inflation in March is primarily due to an increase in the prices of manufactured products, the figures showed.

The month-over-month change in WPI for March was in the negative zone at (-) 0.19 per cent as compared to the previous month of February, reflecting the declining trend in inflation. There was a decline in the prices of food as well as fuel and power groups compared to the previous month, which resulted in the overall month-on-month inflation rate turning negative.

Meanwhile, retail inflation has also been on a declining trend. The Reserve Bank's Monetary Policy Committee has reduced its inflation forecast for 2025-26 to 4 per cent from 4.2 per cent earlier as the 'outlook for food inflation has turned decisively positive,' RBI Governor Sanjay Malhotra said last week.

'Headline inflation moderated during January- February 2025 following a sharp correction in food inflation. The outlook for food inflation has turned decisively positive. The uncertainties regarding rabi crops have abated considerably, and the second advance estimates point to a record wheat production and higher production of key pulses over that last year,' the RBI Governor said.

He observed that along with robust kharif arrivals, this is expected to set the stage for a durable softening of food inflation.

'The sharp decline in inflation expectations in our latest survey for three months and one year ahead would also help anchor inflation expectations, going ahead,' he pointed out.

Furthermore, the fall in crude oil prices augurs well for the inflation outlook. Concerns on lingering global market uncertainties and recurrence of adverse weather-related supply disruptions, however, pose upside risks to the inflation trajectory, the RBI Governor said.

He said that taking all these factors into consideration and assuming a normal monsoon, CPI inflation for the financial year 2025-26 is projected at 4.0 per cent, with Q1 at 3.6 per cent; Q2 at 3.9 per cent; Q3 at 3.8 per cent; and Q4 at 4.4 per cent. He also sees that the risks are evenly balanced.

/IANS