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New Delhi - A sharp decline in inflation rate is no indication that India would enter a deflationary stage, the Indian government has claimed, dismissing concerns that demand slowdown, coupled with plunging inflation amid global recession would make India witness a brief phase of deflation.
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India's annualized inflation rate has fallen to a historic low level, plunging to 0.44, percent, triggering concerns that the country would soon enter a phase of deflation unless the central bank acts fast to prop up demand and growth.
According to government data released Thursday, the wholesale price index (WPI), India's most widely watched inflation measure, sank to 0.44 percent for the week ended 7 March, 2009, as compared to 2.43 percent for the previous week and 7.78 percent during the corresponding week of the previous year.
The inflation rate had touched a 13-year high of 12.91 percent last August due to global slump and slowdown in domestic demand.
A close look at the latest data reveals that decrease in prices of primary articles and fuel, power, light and lubricants resulted in the sharp fall in inflation rate.
According to a government statement released by the Finance Ministry, this is the steepest drop since November 2008.
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