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Inflation dips to 30 year low, government rules out deflation threat
Posted on: 20-03-2009 , 04:: | DY365 Bureau

The rate of inflation has plummeted to its lowest level for the first time in 30 years. The phenomenon has given rise to fears that the economy is headed towards a more severe slowdown with the onset of a deflationary phase in the next few months.

Inflation was at 0.44 per cent for the week ended 7th March from 2.43 per cent in the previous week. This is the lowest figure of inflation in the last 30 years. Even as the Wholesale Price Index (WPI) -based inflation plunged by 199 basis points and is almost certain to move into negative territory by the end of this fiscal, the prices of food articles continued to rule at high levels while those of manufactured goods witnessed a sharp decline.


Inflation 0.44 %, lowest in 30 years

Wholesale Price Index-based inflation plunged by 199 basis points

Prices of food articles continues to rule at high levels

Prices of manufactured goods witness sharp decline

With the slump in WPI inflation mainly accounted for by the plunge in prices of manufactured items, India Inc. expressed serious concern and sought immediate and adequate monetary steps from the Government and the Reserve Bank of India (RBI) to induce consumer demand and thereby ensure growth. On the other hand bankers felt there was no further scope for rate cuts by the RBI. However, the Government has sought to allay apprehensions over the likelihood of the economy entering a phase of deflation.


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