The decline was aided by a favourable base as consumer inflation had touched 7.4 percent in July 2023.

The release is in line with the Moneycontrol poll forecast of 3.6 percent.

The forecasts in the poll ranged from 3.24 percent to 4 percent.

Economists contend that inflation is likely to surprise on the downside compared with the Reserve Bank of India’s 4.4 percent inflation forecast for July-September 2024.

While the central bank did not change the overall inflation outlook for FY25 from 4.5 percent, it did project a higher inflation of 4.4 percent from 3.8 percent for the second quarter of FY25.

Reserve Bank of India governor Shaktikanta Das on August 8 expressed concerns over elevated household inflation expectations, highlighting that fall in core inflation does not merit a change in monetary stance.

The Reserve Bank of India in its policy meeting concluded on August 8, kept the policy rate on hold for the ninth consecutive time.

A second straight month of stronger-than-expected inflation has effectively shut the door on the possibility of a Federal Reserve interest-rate cut before June, and makes back-to-back reductions after that look increasingly less likely.

Gasoline and shelter prices drove the February consumer price index up 3.2% versus a year earlier, an acceleration from January’s 3.1% increase.

Underlying core inflation, excluding gas and food prices, slowed less than economists had forecast, and on a three-month and six-month basis actually gained traction.

Those continued price pressures will not change the policy rate in the 5.25%-5.5% range where it has been since last July.

Tuesday’s inflation report “is an ugly read that will do nothing to sooth nerves” at the Fed, wrote BMO economist Scott Anderson. “Clearly, restrictive monetary policy has not yet fully done its work and a patient and slightly hawkish Fed must remain in place for the monetary medicine to fully take effect.”