Russian inflation decelerated sharply in March.

The headline CPI dropped to 7.3% year-over-year in March from 8.1% YoY in February, according to the Federal Statistics Service in Moscow.

This number was below consensus expectations of 7.5% YoY.

Additionally, prices increased 0.5% from the previous month's level, below expectations for 0.6%.

Data under the hood showed that inflation dropped in each major price category.

Food inflation stood out in particular, as it fell to its weakest rate since mid-2012 after several months of steep declines. March's reading came in at 5.2% year-over-year, a stark contrast from December's 14.0%.

"The big picture is that the sharp fall in inflation over the past few months has been in large part the result of the fading effects of the ruble crisis in late 2014 and early 2015," Capital Economics' Liza Ermolenko wrote in a note to clients after the data crossed.

"But these effects now appear to have fully unwound. As a result, we think that the big falls in inflation are now probably behind us, and indeed, the headline rate should edge up a little over the coming months peaking at around 9.0% in Q3," she added.

As for what this could mean for monetary policy, Ermolenko wrote that her team expected the central bank to most likely remain cautious and hold rates at 11.00% at its meeting later this month.

Notably, the Capital Economics team previously observed that the Russian ruble had been the "star performer" among emerging markets in March, helped by rising global oil prices.

The ruble is weaker by 0.6% at 69.1522 per dollar.