New Delhi: India's inflation based on a wholesale price index fell for the first time in thirty years and reached minus 1.61 per cent for the week ending June 6. It was worse than a median forecast of an annual fall of 1.52 per cent. The annual inflation rate was 11.66 per cent during the same period in the previous year. With this, India is possibly the only country that is recording deflation though the European region is nearing the zero rate of inflation on account of recession.

     According to official data on Thursday, the inflation rate, which was 0.13 per cent in the previous week, had last turned negative in 1977. However, the prices of essential commodities like vegetables, cereals and oil are going up. According to Montek Singh Ahluwalia, deputy chairman of the planning commission, negative inflation is not a matter of concern. This could be a correction to high price rise last year, he said. The essential commodities of the common people constitute less than a quarter of the wholesale price index components. With theses prices still up, the negative inflation could be a resultant of the fall in fuel prices. Finance ministry sources believe the negative trend in inflation will continue for some more time.
-June 18, 2009