Inflation in India has dropped close to zero, official data showed Thursday, as Asias third-largest economy continued a sharp slide towards deflationary territory. Annual inflation fell to 0.44 percent for the week ended March 7 from 2.43 percent the previous week, according to the Wholesale Price Index, the most watched cost-of-living measure.
The fall stoked expectations the central bank would cut interest rates again in a bid to jolt the economy out of a looming deflationary period. Indias inflation rate has slid from a 13-year high of 12.91 percent last August due to a slump in oil and other global commodity prices as well as the effects of the world-wide slowdown. The central bank still "has the leeway to lower rates further," said D.K. Joshi, principal economist at ratings agency Crisil.
The bank has slashed its key short-term lending rate to commercial banks by 400 basis points since October to a record low of five percent to spur growth. The latest drop, bringing inflation to its lowest level since the current inflationary series began in 1993-94, was sharper than expected. Economists had forecast inflation at between 0.80 and 0.94 percent.
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