Inflation falls to record low, deflation may come soon

New Delhi, Mar 19 (PTI) Heading towards deflation,India witnessed an all-time low rate of price rise at 0.44 percent for the first week of March as most food and fuel itemsas well as some manufactured products turned cheaper. Fall in wholesale price-based inflation by 1.99percentage points from 2.43 per cent during the week endedFebruary 28 may give room to the Reserve Bank of India tofurther cut rates to spur growth. "There is some possibility of deflation in the comingdays. It gives RBI scope to go for more monetary easingmeasures," economic think tank RIS Director-General NageshKumar said. Commerce Secretary G K Pillai also said inflation isno longer an issue. However, many others believe that the central bank wouldlike to see a fall in the high retail prices before takingsuch a step. "On the RBI policy cut, there is a dilemma as theconsumer price index is still above 9 per cent," Yes BankChief Economist Shubhada Rao said. A high base effect due to the 7.78 per cent inflation inthe corresponding period of last year also had a depressingeffect on the rate of price rise for the week ended March 7,2009. The Prime Minister' & chr(39) & 's Economic Advisory Council, SureshTendulkar, said, "It (inflation) is nothing but base effectand it may fall in negative territory in the coming weeks." As price rise inches towards zero, ICRIER SeniorConsultant Joseph Mathew said inflation was negative in 1975. Inflation, which catapulted to double-digits after theGovernment had increased prices of petroleum products in Junelast year, has been on a downward path for quite some timedue to global fall in prices of crude and commodities as wellas slackening demand. Two major inflation indices -- primary articles, whichinclude food; and fuel, power, light and lubricants --declined. However, the index for manufactured products, which hasan overwhelming 63.75 per cent weight in the wholesale priceindex, remained unchanged at the previous level. More specifically, the prices of gram declined by fiveper cent; tea and fruit & vegetables by three per cent each;and jowar, condiments and spices by two per cent each. However, sea fish turned expensive by two per cent. Among fuels and lubricants, the prices of jet fuel andelectricity for agriculture fell by eight per cent each, lightdiesel oil by seven per cent and bitumen by two per cent.(MORE) PTI