India's inflation rate for the week ended March 7 plunges to a two-decade low of 0.44%, compared to 2.43% in the preceding week, paving way for the Reserve Bank of India to announce a further cut in interest rates to stimulate the economy. This is the lowest number in the current WPI series and is heading towards zero, and analysts expect it would soon turn negative.
The rate was 7.78% for the corresponding week of the preceding year, according to the data released by the Ministry of Commerce and Industry.
Going by provisional figures, the wholesale price index or WPI for all- commodities fell 0.04% to 226.7 from 227.7, the week before. Inflation, based on the wholesale price index, dropped due to the lower prices of fruits and vegetables, aviation turbine fuel, light diesel and some manufactured items covered under all category group.
The final estimate of inflation for the week ended January 10 was lowered to 5.46% from the earlier provisional figure of 5.60%.
The main index for primary articles declined by 1.0%, due to lower prices of gram, raw cotton and linseed, rate and mustard seed, groundnut seed, tea, fruits and vegetables, jowar, condiments and spices, copra as also masur. However, the prices of raw rubber, moong and fish-marine increased.
The index representing fuel, power, light and lubricants declined 0.8% due to the lower prices of aviation turbine fuel, electricity for agriculture, light diesel and bitumen. However, the prices of naphtha, furnace oil, railway traction and electricity for domestic, commercial and industry moved up.
The index of Manufactured Products was unchanged at its previous week's level of 199.2. However, prices of computer and computer-based systems, calcium ammonium nitrate n-content, bopp film, hessian and sacking bags as also hessian cloth increased, whereas the prices of oxygen gas in cylinder, woollen yarn, liquid chlorine, newsprint, acetylene and titanium dioxide and acids of all types declined.
Cuts in government-decided fuel prices, falling global commodity prices, and policy measures, such as cuts in duties and interest rates, contributed to the sharp fall in inflation.
Including the latest cuts earlier this month, the Reserve Bank of India lowered the repurchase rate by 4 percentage points to 5.0% since early October, and the cash reserve ratio by an equal amount. The reverse repurchase rate was lowered by 2.5 percentage basis points to 3.5% over the same period.
The apex bank expects inflation to go below 3% by the end of the current fiscal.
HDFC's Chief Economist Abheek Barua said a sharp decline in food prices would help close the gap between the wholesale and consumer price indices.
It is often argued that WPI does not truly reflect inflation, as it takes into account only wholesale prices. Even the consumer price index data also do not show the actual picture.
Sudhanshu Pandey, a commodity consultant, agrees that commodity prices have not gone down by the same ratio as inflation. One key reason is that big retailers have not cut prices believing that low inflation will be short-lived.
Consumers are unlikely to get any relief from high food prices, even though the WPI-based inflation has touched a record low. Though it was ruling at 12.08% September last year, the latest rate comes as a huge relief to all. But the common man or the salary earner, pays less for his daily needs than he did in September? Not quite. What determines his monthly expenses are not wholesale prices that govern the inflation rate, but what he actually pays to his neighborhood shop.
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May 22, 2026 14:46 ET Minutes of the latest Fed policy session was the highlight of the week along with survey data on the U.S. housing market. In Europe, survey data signaled the trends in the euro area private sector. Further, consumer price inflation data from the U.K. was in focus. In Asia, various economic indicators from China drew attention to the health of the economy.