Inflation declined to over 14 months low of 3.92 per cent for the week ended on February 7, on account of lower prices of manufactured items.
The wholesale price index, coming below four per cent, may prompt the Reserve Bank of India to cut key policy rates. An indication was made by the RBI Governor D Subbarao in Tokyo on Wednesday.
During the week, prices of manufactured items such as sugar, imported edible oil and textile items such as cotton yarn got cheaper.
At the same time, prices of chemical products, iron and steel and cables became cheaper.
On the contrary, some food items such as pulses, fruit and vegetables and maize became dearer during the week though prices of tea declined.
Fuel items too became expensive during the week on account of higher prices of naphtha and furnace oil, which went up by 10 per cent and 5 per cent respectively, despite fall in prices of crude oil.