Much to the relief of government battling rise in prices, inflation has fallen below the psychologically important 12 percent for the first time in two months even as the Finance Ministry said the rates of 30 essential commodities have gone up on a weekly basis.
Inflation declined by 0.15 per cent to 11.99 per cent during the week ended 20th September from 12.14 per cent a week earlier, despite low base of 3.51 per cent a year ago.
However, analysts believe RBI will keep policy rates unchanged in its mid-term review later this month on account of high inflationary pressures.
Among the food articles, imported and other edible oils, vegetables, pulses and cereals turned cheaper.
However, certain other food items like milk, sea fish, tea, spices, meat and eggs became expensive.
Most manufactured items also turned costlier even as fuel and power category remained unchanged.
The Finance Ministry said in a statement in New Delhi that inflation of 30 essential commodities increased to 7.70 per cent during the week from 7.58 per cent a week ago.
There was, however, decline in the prices of cereals, gram and urad, sugar and edible oils, it said.
While a decline in inflation may give a little breathing space to government, experts believe the rate of price rise would remain above double digits till this calendar year end.
"Global indicators are showing decline in prices and it will have gradual impact on products in India. But it has a long way to go before inflation coming to single digit," said Axis Bank economist Saugata Bhattacharya.
Official sources said RBI is not likely to change its tight interest rate regime as inflationary pressures are high in the economy. Analysts also echoed the sentiments.
"RBI will keep interest rates unchanged," Yes Bank Chief Economist Shubhada Rao said.
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