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Wholesale price inflation has remained static for the past three months at 7 per cent, well below last October's 10 per cent.
Food prices played truant, but inflation for manufactured products (which have a 65 per cent weight in the index) declined steadily, month after month, from 8 to 5 per cent.
Senior officials in the establishment have signalled their inclination to use falling inflation as an opportunity to launch large cuts in fuel and fertiliser subsidies. When this is done, prices will rise again. And the results will be worse if, as in the case of the Rail and Finance Ministry Budgets, it is undone.
Despite RBI cutting rates on Tuesday one thing is certain.
This results season will show a shrinkage of margins across a wide array of industries. Because companies witnessed cost increases which they were not able to pass on.
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