The official rate of inflation based on wholesale prices dropped to 8 per cent for the week ended November 29 from 8.4 per cent in the previous week, primarily due to declining prices of fruits and vegetables, the government said on Thursday.
With the economy in a slowdown and inflation edging closer towards lower single digits, the chances appear to have increased for a further easing of the monetary policy, especially through interest rate cuts.
The inflation rate was 3.89 per cent during the corresponding week last year but climbed up steadily in 2008, touching a
peak of 12.82 per cent in August.
Economists said inflation will further drop in the coming weeks. It is expected to touch the 7 per cent level in the next couple of weeks.
“However, it is still surprising that inflation level was relatively stubborn given the fact that there has been a collapse of global oil prices,” said Saugata Bhattacharya, vice-president, Axis Bank said.