India’s economy has slipped into deflation, according to its closely watched wholesale price index, but officials and analysts said the first decline in wholesale prices in 30 years did not signify a contraction in demand.

India’s wholesale prices levels fell 1.6 per cent during the week ending June 6, compared with their 0.13 per cent increase the previous week, the first time since the financial year ending March 1978 that the index has fallen.