The inflation rate saw a marginal decrease to 0.26 per cent for the week ended March 28 this year. This is primarily because of the decrease in prices of primary articles. It was 7.8 per cent in the corresponding week last year and 0.31 per cent in the previous week ended March 21.
With headline inflation as measured by the wholesale price index (WPI) hovering around zero rate, experts predict the rate to fall into negative territory soon because of high base effect, as oil and food prices rose sharply in the same period last year.
However deflation, which is marked by negative inflation numbers, is unlikely to sustain as oil prices are expected to pick up once economies around the world recover.
“High commodity prices would then again fuel inflation in India. Therefore, India is not expected to experience deflation,” said Sherman Chan, an economist with Moody’s Economy.com.
Low inflation, economists say, provide an opportunity for the RBI to cut key interest rates and stimulate the slacking consumption levels.
However, the inflation rate for items consumed by the common man continues to be high. For example, sugar inflation is still at 16.99 per cent in the reported week, compared with 19.69 per cent in the previous week. Cereal and pulses inflation rates also saw a fall of around 2 percentage points to 9.61 per cent and 8.29 per cent, respectively.