Much to the relief of the government, inflation further declined to 3.52 per cent for the week ended September 1 compared to 3.79 per cent in the previous week fuelling speculation that the Reserve Bank of India may soften the monetary policy.
The wholesale price-based inflation stood at 5.34 per cent in the corresponding week a year ago. This is a third week in a row that inflation has remained below the four per cent mark.
With inflation now coming down four per cent level there is now overwhelming expectations that the RBI might soften the monetary policy. However, analysts feel that RBI would maintain status quo in the interest rate regime, given the high oil and commodities prices in the domestic and global markets.