New Delhi: Declining food and fuel prices pushed inflation down for the eighth week in succession to 6.38% for the week ended 20 December, a trend that may allow RBI to effect more cuts in key rates to further growth.
Inflation, measured by movement in wholesale prices, came down by 0.23% from 6.61% in the previous week. It was 3.74% a year ago.
Among the major items, prices of tea, fruits and vegetables declined during the period under review.
The index of fuel items came down by 0.5% on account of decline in prices of jet fuel (ATF) by 13%, bitumen by 7%, light diesel oil by 6% and furnace oil by 3%.
The prices of these fuel items, which are not decided by the government, declined on account of softening of crude oil prices in the international market.
In the manufactured goods category, the imported edible oil, salt, cement, iron and steel became cheaper during the week.
The items which became dearer during the week include maize, bazra, jowar, gur and newspaper.
The inflation for the week ended 25 October remain unchanged at 10.72%.
The fall in inflation will induce RBI to further cut key policy rates to boost economic expansion. RBI Governor D Subbarao earlier in the week met Prime Minister Manmohan Singh to discuss the issues concerning economic slowdown.
The government too, in its Mid-Year Economic Review tabled in Parliament, made a strong case for reducing key policy rates in the next six to 12 months.