Thursday, India's inflation rate for the week ended March 28 fell to 0.26% from 0.31% a week before. The inflation rate stood at 7.75% for the corresponding week of the preceding year, data released by the Ministry of Commerce and Industry say.

Going by provisional figures, the wholesale price index or WPI for all- commodities was unchanged at 227.3.

Inflation, based on the wholesale price index, increased due to higher prices of dolomite, felspar, fruits and vegetables, maize and some manufactured products covered under all-category groups.

The final estimate of inflation for the week ended January 31 was lowered to 3.98% from the earlier provisional figure of 4.39%.

The main index for primary articles declined by 0.3%, due to lower prices of fire clay, iron ore, chromite, linseed, copra, tea and fodder. However, prices of dolomite, felspar, raw rubber, barley, barites, steatite, raw cotton, ragi, fruits and vegetables and maize moved up.

The index representing fuel, power, light and lubricants was unchanged at its previous week's level of 320.9.

The index of Manufactured Products rose by 0.2%, due to higher prices of benzene, enamelled copper wires, imported edible oil, cotton yarn-cones, hessian cloth, cotton yarn-hanks, malted food, rice bran oil, oil cakes as also gingelly oil increased, while prices of PVC resins, pigments, sugar and newsprint declined.

Commenting on the inflation data, Montek Singh Ahluwalia, Deputy Chairman, Planning Commission, said the figure is very much in control, and not going through the roof. The government has already provided two stimulus packages, and RBI measures of cutting rates and easing reserve norms have already pumped in over Rs.3 lakh crore in the economy.

Peter Redward, Director, Head of Rates Research, Emerging Asia, Barclays Capital, says the Reserve Bank of India (RBI) may cut rates by 25 basis points this time.

A Citibank report says that food prices will stay high this year, though the consumer price index slid below 10% to 9.6% in February and the wholesale price index threatens to go sub-zero.

Citibank report added that the prices of essential food items, such as rice, wheat, pulses, fruit and vegetables would come down from last year's peak levels, but remain above the levels in 2005, when the global economy was booming.

Rohini Malkani, economist at Citigroup India, said there was no room for complacency, as food prices could remain sticky. This is because the agriculture sector was reeling under tighter credit that could hamper expansion of farm output and lead to low global stocks. The Food and Agricultural Organization has projected a decline in global production of cereals and a 27% increase in food prices.

The Indian Meteorological Department's first estimate of the monsoon is expected later this month. The monsoon will play a vital role this season. If any concerns emerge about the monsoon, the repercussions would be seen in prices, Mehul Agrawal, commodities research analyst at Sharekhan said.

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