Inflation based on wholesale prices eased to 3.58% in December 2017 as prices of food articles declined even as fuel cost witnessed a surge.
Calculated on the basis of Wholesale Price Index (WPI), the inflation was 3.93% in November 2017 and 2.10% in December 2016.
As per government data released on Monday, inflation on food articles slowed to 4.72% in December, from 6.06% in November 2017.
Vegetables too witnessed some softening with annual inflation at 56.46% in December as against 59.80% in the previous month. Kitchen staple onion witnessed a whopping 197.05% price rise in December. Inflation in protein rich eggs, meat and fish cooled to 1.67% in December, while that in fruits spiked to 11.99%.
In the fuel and power segment, wholesale inflation rose to 9.16% in December, while it was 2.61% for manufactured items.
Data released last week showed that retail inflation breached the RBI's comfort level to touch 5.21% in December on rise in prices of food items, especially vegetables.
The Reserve Bank takes into account retail inflation while deciding on key policy rates. In its last policy review in December, the RBI had kept key interest rate unchanged. It raised inflation forecast for remainder of the current financial year to 4.3-4.7%, on account of global crude oil prices and implementation of the 7th Pay Commission recommendations.
Meanwhile, inflation for October has been revised upwards to 3.68% from the provisional estimate of 3.59% released earlier.
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