India plunges into deflation after 32 years

Bangalore: Battered by recession, the Indian economy has registered deflation for the first time in 32 years. India's inflation rate has dropped to minus 1.61 percent for the week ended June 6.

"The annual rate of inflation, calculated on a point to point basis, stood at minus 1.61 percent for the week ended June 6 as compared to 0.13 percent for the previous week and 11.66 percent during the corresponding week of the previous year," said a government statement said.

The wholesale price-linked inflation, which was at 0.13 percent the previous week, last turned negative in 1977, according to the data released by the Federal Ministry of Commerce and Industry. The decline was due to the fall in fuel prices as crude oil was down to 70 dollars a barrel against 140 dollars a barrel during the same period a year ago.

But, the week's prices for food items were 8.7 percent higher year-on-year, as pulses increased 17 percent, prices for cereals went up to 13.5 percent and the fruit and vegetables to 10 percent.

However, the period was being witness as a brief phase of negative inflation and policy makers marked it as a window of opportunity for the Central Bank to step in and lower interest rates, the report said.