New Delhi: Despite rise in prices of major food products as well as some fuel and manufactured items, inflation fell below 6 per cent after more than two months.
The annual rate of inflation came down to 5.74 per cent for the week ended March 31, from 6.39 per cent for the last week.
This resulted in average inflation standing at 5.18 per cent for 2006-07, within RBI's projection of 5-5.5 per cent. Inflation had averaged 4.46 per cent during 2005-06.
Rising prices have become a political scoring point in ongoing polls to Uttar Pradesh assembly and was also partly blamed for the Congress defeat in elections for Punjab and Uttarakhand assemblies and Delhi's local bodies.
Finance Minister P Chidambaram said this week that improving supply side constraints along with monetary and fiscal steps would help in moderating inflation.
The decline in inflation would also give some respite to the Government, which has been struggling hard to bring down inflation within RBI's projection of 5-5.5 per cent.
The fall in inflation during the week ended March 31 might ease pressure on RBI to tighten monetary policy. But price data to be released next week would play a crucial role in RBI's annual monetary policy review slated for April 24.
Inflation for the last week of 2006-07 softened despite increase in all major indices, except for manufactured items, which remained unchanged. This meant that prices did rise in major categories, but the increase was not so steep as witnessed in the previous week.
While prices of pulses, 15 lakh tonnes of which are slated to be imported in next 6-8 months, rose along with pork, ragi, bajra, milk, masur, gram, vegetables, raw rubber and soyabean; those of condiments, spices, fish marine, castor seed, copra, cotton and coconut oil declined.
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