Seasonal softening in food prices and a sharp drop in fuel costs helped India's annual wholesale rate of inflation decline marginally to ( - )0. 90 percent for January from ( - )0. 73 percent for the month before, official data showed on Monday.
The annual inflation, however, stood higher at ( - )0. 95 percent during January 2015.
In reaction, India Inc called for government measures to revive demand and industrial growth.
It was the 15th straight month since November 2014 that deflationary pressure persisted and wholesale inflation has remained in the negative zone.
As per the wholesale price index numbers released by the ministry of commerce and industry, though the annual food inflation declined, it was still high at 6. 02 percent, against 8. 17 percent in the month before, with pulses dearer by 44. 91 percent and vegetables up 12. 52 percent. Potato prices were down 17. 08 percent.
The annual inflation rates of other major categories such as fuels and manufactured products remained in the negative at ( - )9. 21 percent and ( - )1. 17 percent respectively.
India's overall retail prices too have been rising. Annual retail inflation climbed to 5. 69 percent in January from 5. 61 percent in the month before, data on the consumer price index (CPI) showed last week.
Food inflation, or CFPI, during the month, ruled higher at 6. 85 percent, as compared with 6. 4 percent in December 2015 and 6. 14 percent in January 2015.
While rural retail inflation in January was 6. 48 percent, the urban CPI came in appreciably lower at 4. 81 percent.
The retail inflation in January was mainly driven up by higher food costs. The inflation in food and beverages during the month was 6. 66 percent.
As per Monday's data on wholesale prices, the annual inflation for pulses in general eased to 44. 91 percent, and for onions to 5. 51 percent.
The Reserve Bank of India has set a 6 percent retail inflation target for January 2016. Presenting the first bi - monthly monetary policy statement for this fiscal in April last year, RBI Governor Raghuram Rajan said the CPI inflation would hover around 5 percent in the first half of the fiscal, and a little above 5. 5 percent in the second half.
Commenting on the data, the Federation of Indian Chambers of Commerce and Industry (Ficci) said the persistence of deflationary conditions reflected continued moderation in demand.
"This, combined with two consecutive months of negative IIP growth, point towards strain in industrial activity, " Ficci Secretary General A. Didar Singh said in a statement here.
"The government should not shy away from recalibrating the fiscal deficit target in order to push public investments with a view to add productive capacity to the economy, " he said.
"Considering that inflation is within the target level of the government and the RBI, focus of policymakers should now shift to revive GDP and industrial growth, " the Associated Chambers of Commerce and Industry of India (Assocham) said in a statement here.
Deloitte senior director Richa Gupta said energy and manufactured products inflation "remained in the red in line with global trends".
"With the food inflation coming down by over 2 percent from last month, the government will have to work on supply side constrains to keep a check on food inflation, especially at the retail level as it can play spoilsport in an otherwise deflationary scenario, " she said.
"Addressing supply side concerns in the rural economy remains one of the top agendas for the budget, " she added.
Finance Minister Arun Jaitley will present the union budget for the next fiscal on February 29.