Inflation to touch zero per cent soon: Axis Bank

The declining inflation will touch zero per cent by the end of this month on account of cut in excise duty, strong base effect and easing of jet fuel prices, according to Axis Bank.

Whole price index inflation will touch zero per cent by March end 2009, on the back of 2 per cent excise duty cut, a 7 per cent cut in ATF prices and a strong base effect," Azis Bank said in a note.

The report further said that a revival in demand is unlikely to be so strong and inflation might be negative in April 2009.

However, consumer price index inflation, which is more representative of prices of a household consumption basket, continues to be high, it said.

"The retail petrol, diesel and LPG price cut on January 31 and the 2 per cent services tax cut announced in February 24 are likely to be reflected in CPI inflation going forward," it added.

From the peak of around 13 per cent last year, inflation came down to less than one-fourth at 3.03 per cent by the third week of February.

This has prompted RBI to ease monetary measures further.

The central bank has slashed Repo (overnight lending rate) by 50 basis points to 5 per cent and Reverse Repo (overnight borrowing rate) identically to 3.5 per cent early this month.

The Reserve Bank has infused over Rs 4,00,000 crore (Rs 4,000 billion) since October through various monetary measures.