Deflationary trends continued for the ninth month in a row in July with wholesale inflation plunging to a historic low of (-)4.05 per cent on cheaper vegetable and fuel, which may prompt RBI to cut interest rate ahead of the September 29 policy meet.

The WPI number follows retail inflation (CPI) data, which had slipped to a record low of 3.78 per cent in July. The overall wholesale price index-based (WPI) inflation was (-)2.40 per cent in June, government data showed today. It has been in the negative zone since November 2014. A year ago in July 2014, inflation was 5.41 per cent.

During the month, pulses, milk, edible oil, egg, meat and fish turned dearer. RBI Governor Raghuram Rajan after the monetary policy announcement on August 4 had said the central bank may cut interest rate even out of the policy cycle depending on how macroeconomic indicators play out.

"We are waiting for information. There was more need to move fast in the early stages of the turnaround. We will take all information into account and decide whether at times it warrants moving in between policy cycle or it does not," he had said after the policy meet.
RBI mostly tracks the consumer price inflation for its policy decision, and its next review is due on September 29.