Posted: 18 June 2009 1510 hrs

A spice market in Mumbai

NEW DELHI: India's annual inflation rate slipped into negative territory, official data showed on Thursday, with the slowing economy cutting into demand.

Inflation stood at minus 1.61 per cent for the week ended June 6, down from 0.13 per cent the previous week, according to the Wholesale Price Index, India's most watched cost-of-living measure.

Less than a year ago, inflation in India touched dizzying 13-year highs, but a period of deflation had been expected as rates tumbled, reflecting slackening growth in Asia's third-largest economy.

Deflation – in which falling prices prompt consumers to delay buying, deepening a downturn – has become a growing concern across the globe as demand for goods has dried up.

India's inflation crash was a symptom "of a deeper malaise" with an "adverse environment" for jobs, salaries and business, prompting a fall in prices, HDFC Bank chief economist Abheek Barua said earlier this year.

The country's inflation rate has tumbled from 12.91 per cent last August also partly because of a dive in the global price of oil and other commodities.

- AFP/so

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