This further fall of WPI has sparked hopes that the Reserve Bank of India will cut interest rate ahead of the September 29 policy meet.
WPI data usually follows the CPI data, i.e. the retail inflation, which had slipped to a record low of 3.78 per cent in July.
WPI has been in the negative zone since November 2014. A year ago in July 2014, inflation was 5.41 per cent.
In the month of July, pulses, milk, edible oil, egg, meat and fish all turned dearer, revealed government data on Friday
On August 4, after the monetary policy review, RBI Governor Raghuram Rajan had said that the central bank may cut interest rate even before the policy cycle, depending on how the 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,” Rajan had said at the policy meet.
Meanwhile, the Sensex rallied 517 points to finally close at 28,061.31. Nifty too stayed above the 8,500 mark to end at 8518.55. The markets rallied on hopes that the Goods and Services Tax (GST) regime will take off soon after assurances from the government. The government said it was determined to stick to its implementation timeline of April 2016. Markets also rallied on the speculation that India will get inflows worth $254 million on MSCI rejig.