Inflation at 30 year low

Inflation dipped to 0.13% for the week-ended May 30, the lowest level in three decades. The figure, which stood at 0.48% last week, is expected to turn negative by next Thursday. Prime Minister’s Economy Advisory Council chairman Suresh Tendulkar, however, ruled out any possibility of deflation. Economists feel inflation will remain in the negative territory for two months. “We expect a spell of negative year-on-year inflation for 2-4 months from June 6, 2008,’’ said consulting firm Edelweiss in a report. Inflation is hovering at less than 1% level since March 7. It was expected to fall below zero earlier but because of the sharp rise in the food article prices, it continued to hover around 0.5% for the last three weeks. During the same period last year, because of spurt in prices of commodities and food articles, annual inflation was at double-digit levels. In the week ended May 31, 2008 inflation was ruling at 9.32%. As the annual inflation is measured against the prevailing wholesale price index (WPI) of the corresponding week last year, the sudden spurt in price rise in the week ended June 7, 2008 made the WPI index rise by 1.8% to 236.5 from 232.3 in the previous week. But, in 2009, the WPI index is witnessing an average weekly rise of (- 0.01%) to 0.6%. In the week ended May 30, 2009, WPI was at 232.6. Even if the index rises by 1% during the week ended June 6, 2009, inflation will become negative.