Inflation turned negative for the first time in 30 years

India: The Inflation turned negative for the first time in 30 years in the first week of June but the prices of food items like fruit and vegetables, cereals were still higher than last year. The inflation stood at minus 1.61 per cent for the week ending June 6, according to the data released on Thursday.

In contrast, food items were raised by 8.7 per cent from the comparable to last year as pulses moved up 17 per cent, cereals 13.5 per cent, and fruit and vegetables 10 per cent.

The wholesale price index has risen by 2.3 per cent since Feb. The high inflation last fiscal year 11.6% makes the rise in price this year look less. The ecomist call this effect has base affect, has the previous year price rise have a effect in the current fiscal year.


Manufactured Products, the year-on-year inflation rate fell to 0 per cent in the current week, down from 0.4 per cent the previous week.

The share market responded positively over the development and rose by about 200 points expecting monetary measures by RBI.

The finance secretary, Mr Ashok Chawla, said it is because of base effect of previous year high inflation and the demand in the economy is not reduced and this figures will correct itself.