India witnessed a slowdown in retail inflation to a four-month low in March to 5.91 per cent, government data stated on Monday. This drop will help the Reserve Bank of India (RBI) to ease the interest rates further as it aims to encourage economic activity amid the COVID-19 caused lockdown.

The retail inflation based on Consumer Price Index (CPI) was 6.58 per cent in February 2020 and 2.86 per cent in March 2019.

The inflation in the food basket was 8.76 per cent in March 2020, lower from 10.81 per cent in the previous month, as per the CPI data released by the National Statistical Office (NSO).

The RBI mainly factors in retail inflation while deciding its bi-monthly monetary policy. The government has mandated the central bank to keep inflation at around 4 per cent.

Economists in a poll by Reuters had expected the consumer inflation to be at 5.93 per cent in March.

The NSO data showed due to the lockdown and ongoing pandemic crisis the calculating the inflation was collected only till March 19, 2020.

“Keeping in view the preventive measures taken by NSO and announcement of nation-wide lockdown by the Government to check the spread of COVID-19 pandemic, the fieldwork for price collection of Consumer Price Index (CPI) was suspended with effect from 19th March 2020 and about 66 per cent of price quotations were received,” the statistics department said.

Earlier, RBI while presenting its Monetary Policy Report had said, India’s economic recovery has been sharply altered the outlook for India’s economic growth due to the COVID-19 crisis.

The central bank had also revised its CPI inflation estimate to 4.8 per cent for the June quarter and 4.4 per cent for the September quarter.

After a three-day emergency meeting, held last month, the RBI reduced the key policy rate by 75 basis points with an aim to shore up liquidity in line with central banks based across the globe.