New Delhi, Feb 26: Continuing its downward slide, inflation fell to about a 15-month low of 3.36 per cent, providing greater room to the RBI to cut interest rates to perk up the slowing economy.
While most products including food and manufactured items became cheaper, some luxury items like wine turned expensive, leading to a fall of 0.56 percentage points during the week ended February 14 from 3.92 per cent in the previous week.
Economists say the fall in inflation was expected as the global financial meltdown and slowing economy have depressed prices.
This would prompt the Reserve Bank to cut key rates or other tools to spur economic growth as the Government does not have much space left to boost the economy.
Yesterday, Finance Minister Pranab Mukherjee expressed the hope that the RBI may take appropriate policy action at the right time.
In Parliament, Mukherjee said he had also pointed out to bankers this month that prime lending rates are too high.
"RBI is expected to cut rates," Crisil Principal Economist D K Joshi said.
HDFC Bank Chief Economist Abheek Barua expected deflation by April-May. He said prices of items virtually in every category have fallen, except for non-food articles in raw form.
Bureau Report
