The annual inflation rate, based on the wholesale price index declined by 0.50 percentage points to 2.03 per cent from 2.53 per cent recorded in the previous week. The rate was 8.12 per cent in the corresponding week a year ago. The inflation rate has not gone below 2.03 per cent since 1980, the year when the government started keeping the inflation record on weekly basis. Prior to 1980, records are neither easily available nor comparable as data compilation was on yearly basis, official sources said.

The steep fall in inflation rate is mainly on account of a good agricultural production last year with foodgrain production expected to reach a record 203 million tonnes, finance ministry sources said.The sources said with a normal monsoon forecast in the current year, general price level was likely to remain stablein the coming months.

However, inflation based on final index calculated on appoint-to-point basis stood at 3.9 per cent for the week ended may one as against 3.7 per cent calculated on provisional index. The overall index declined during the week mainly on account of a fall in index for primary food articles compared to the previous week.

During the reference week, the indices for ``primary articles'' and ``fuel, power, light and lubricants'' remained constant at the previous week's level while the index for ``manufactured product'' declined marginally.