Inflation in India edged closer to zero, according to official data, raising fears of deflation and prompting expectations of a further cut in interest rates to spur the slowing economy.

Annual inflation fell to 0.27% for the week ending 14 th March from 0.44% the previous week, according to the Wholesale Price Index, the most watched cost-of-living measure.

The central bank has slashed its key short-term lending rate to commercial banks by 4% since October to a record low of 5% as it tries to kick-start loan activity and consumer demand.

India’s inflation rate has tumbled from a 13-year high of 12.91% last August due to a slump in oil and other global commodity prices as well as the effects of the worldwide slowdown.