Easing prices of fuel, food items and manufactured goods kept inflation in the negative zone for the seventh consecutive month in May, although prices fell at a slower rate of (-)2.36% as against the previous month.
The Wholesale Price Index (WPI) based inflation was (-)2.65% in April. It has been in the negative zone since November 2014.
Inflation in May last year was 6.18%.
The lower inflation comes amid a forecast of deficient monsoon this year.
As per the government data released on Monday, vegetable inflation was (-)5.5%, with potato recording a dip of about 52%.
Protein rich items like egg, meat and fish too were cheaper in May as compared to the previous month and so were milk, fruits, rice and cereals.
Overall food inflation was 3.8%, much lower than the previous few months.
Similarly, the May inflation in manufactured items (food products, sugar, edible oils, beverages, etc) declined by 0.64 per cent, lowest in past many months.
Inflation in fuel and power basket was at (-)10.51% on annual basis, though slightly up from April.
Retail inflation in May, as measured on Consumer Price Index (CPI), was 5.01%, marginally up from the previous month.
Reserve Bank has cut the key interest rate (repo rate) by 0.75% in 2015, and the government has asked banks to reduce their lending rates.