The Wholesale Price Inflation for the month of Aug 2015 dropped to -4.95 per cent, from -4.05 per cent, sparking worries of deflationary kind of prices.
The fall in WPI inflation will now raise pressure on the Reserve Bank of India to cut repo rates fast.
The biggest decline was seen in fuel and power, which dropped 4.5 per cent in the month of Aug 2015, as compared to the previous month, on a decline in furnace oil, aviation turbine fuel and diesel.
Manufactured index increased by a marginal 0.4 per cent compared to the previous month.
The CPI inflation will be declared later today and would be the key to the RBI's decision on an interest rate cut later this month. Most industrialists and analysts are now factoring in a 25 basis points cut in the Reserve Bank of India (RBI's) repo rate cut. Read difference between CPI and WPI Inflation
Today's accelerating WPI inflation into the negative territory raises the prospect and worry of a price deflation rather than inflation, as right pointed out by chief economic adviser Arvind Subramanian.