Inflation dips to 4.39%

Inflation has dipped to 4.39% in the week ending January 31, the lowest level since January 12, 2008, mainly due to recent fuel price cuts. On January 28, the government had cut petrol price by Rs 5 a litre, diesel by Rs 2 a litre and LPG by Rs 25 per cylinder. In the week ending January 24, inflation was at 5.07%. Such a steep fall in inflation will give RBI room to cut key rates, paving the way for banks to lower interest rates. In the last two weeks, inflation declined by 1.25 percentage points. Several Economists feel if the government and RBI do not check this fall now, inflation may turn negative by April, triggering a deflation scenario.