Food inflation fell to a three-and-a-half-month low of 9.42 per cent for the week ended March 5 as prices of potato and pulses declined.
The drop in inflation, which is still not in comfort zone, is viewed as a breather for the government grappling with high price rise of essential commodities.
Food inflation in the previous week was 9.52 per cent. After remaining in double digit for several weeks, food inflation came down to single digit in the last week of February.
This is the lowest rate of food price rise since that for the week ended November 27 when it was 8.69 per cent. The food inflation was 20.59 per cent in the comparable period in 2010.
During the week under review, prices of potato went down by over 9 per cent year-on-year, while that of pulses fell by 3.05 per cent.
The government had earlier exuded confidence that the expected record crop of wheat and pulses will help stabilise the rise in prices of food items. Food inflation remained in the double digits for most of 2010.
However, for the week ended March 5, prices of other food items continued to rise.
Cereal prices went up 3.88 per cent year-on-year, while rice became dearer 2.75 per cent. Price of wheat also rose marginally by 0.69 per cent on an annual basis.
While there has been drop in potato prices, vegetables on a whole became dearer by 8.71 per cent on annual basis. Onion was expensive by 6.65 per cent.
During the week under review, fruit prices rose by 19.39 per cent year-on-year. Milk also became dearer by 7.16 per cent.
Egg, meat and fish prices went up by 13.10 per cent on an annual basis.
Meanwhile, prices of non-food articles went by 23.03 per cent year-on-year. While fuel and power became dearer by 12.79 per cent, petrol became costly by 23.14 per cent.
The headline inflation in the country has remained above 8 per cent since February 2010. According to latest data, the overall inflation in February this year was 8.31 per cent.
The RBI in its quarterly review today revised upwards the inflation forecast for March-end to 8 per cent from 7 per cent projected earlier.