Declining for the fourth straight month, WPI inflation fell to 6.62 per cent in January despite rise in prices of food items like vegetables, onions and rice.
The Wholesale Price Index had stood at 7.18 per cent in December and 7.24 per cent in November. It was at 7.23 per cent in January, 2012.
Further, inflation in manufactured items category too witnessed a decline and stood at 4.81 per cent in January, as per official data released on Thursday.
Inflation in food articles, which have a 14.3 per cent share in the WPI basket, however witnessed an increase as onion prices shot up during the month.
Inflation in the food articles category was at 11.88 per cent from 11.16 per cent in December.
Onions became expensive by 111.52 per cent during January, from 69.24 per cent in December, 2012.
While rice became costlier by 17.31 per cent in January, from 17.10 per cent in December, vegetables became dearer by 28.45 per cent from 23.25 per cent in last month.
Inflation in wheat and cereals stood at 21.39 per cent and 18.09 per cent respectively in January.
Potatoes were expensive by 79.07 per cent, while inflation in pulses was up 16.89 per cent.
While, inflation in egg, meat and fish stood at 10.81 per cent, those of milk rose up 4.47 per cent and fruits by 8.42 per cent.
For the fuel and power category, it moderated to 7.06 per cent in January, compared to 9.38 per cent in December, 2012.
The cooling off of January inflation would provide the much needed comfort to Reserve Bank, which had projected March-end inflation at 6.8 per cent.
The central bank had last month lowered interest rates by 0.25 per cent saying that with inflation showing signs of remaining range bound, it was now critical to arrest the loss of growth momentum.