The rate of inflation for the week ended February 28 went down to 2.43% compared to 3.03% of inflation witnessed in the previous week. The decline primarily came due to the high base effect of last year. This is the lowest inflation figure since June 2002.
The wholesale price index (WPI) for all commodities in fact rose marginally by 0.1% to 227.7 on a weekly basis for the said week. However, since the index had shown much bigger increase over the same week last year. The high base effect resulted in the visible sharp decline in annual inflation.
Economists expect this trajectory of inflation to continue as the softening commodity prices and high base effect will keep pulling the inflation numbers down. Most of the analysts agree that India will face a small period of negative inflation numbers on annual basis in coming months. However, deflation, a situation of consistent fall in prices, did not appear to be a big risk at this stage as weekly and monthly inflation may not fall that quickly as is being shown by the behaviour of WPI.