New Delhi - India's inflation rate fell to minus 1.61 per cent for the week that ended June 6, the first time deflation has registered in 32 years, official data showed Thursday.

The wholesale price-linked inflation, which was at 0.13 per cent the previous week, last turned negative in 1977, according to data released by the federal Ministry of Commerce and Industry.

"The annual rate of inflation, calculated on a point to point to basis, stood at minus 1.61 per cent for the week ended June 6 as compared to 0.13 per cent for the previous week and 11.66 per cent during the corresponding week of the previous year," a government statement said.

However, the week's prices for food items were 8.7 per cent higher year-on-year, as pulses increased 17 per cent, prices for cereals went up 13.5 per cent and fruit and vegetables 10 per cent.

The decline was due to the fall in fuel prices as crude oil was down to 70 dollars a barrel against 140 dollars a barrel during the same period a year ago.

The NDTV news channel reported that the Indian economy was not faced with deflation as economists noted there was no consistent fall in food prices.

The period was being seen as a brief phase of negative inflation and policy makers saw it as a window of opportunity for the central bank to step in and lower interest rates, the report said.

India has posted a growth rate of its gross domestic product of 9 per cent for three years running, but the government has lowered the growth projection for the fiscal year
2008-09 to 7.1 per cent. India's financial year runs from April to March. (dpa)