Declining fuel prices pushed down inflation sharply for the sixth consecutive week to 6.84 per cent, the lowest in nine months, a development that could prompt the Reserve Bank of India [Get Quote] to take more bold steps to boost economic growth.

Inflation dipped by 1.16 percentage points from 8 percent in the previous week, primarily on account of reduction in prices of petrol and diesel announced by the government in the first week of the month.

It was 6.21 per cent in the week ended March 1, 2008. The rate during the corresponding period last year was 3.84 per cent.

The government reduced the per litre prices of petrol and diesel by Rs 5 and Rs 2 respectively with effect from December 6 in the wake of falling prices of crude oil in the international market.

Also, the prices of those items which are not decided by the government came down during the week.

The index of 'fuel, power, light and lubricants' fell by 3.7 per cent, as prices of petrol, aviation turbine fuel, naphtha and furnace oil declined by 10 per cent, 7 per cent, 23 per cent and 15 per cent respectively.

In addition to fuel items, the prices of fruits and vegetables, various pulses steel, pig iron and certain metals too declined during the week.

RBI has taken a host of measures releasing as much as Rs 3,00,000 crore (Rs 3,000 billion) to fuel growth and with the inflation coming down further, it might take more steps to boost industrial output.

Apart from fruits and vegetables, prices of imported edible oil, rice bran oil and coconut oil also declined.

The index for chemicals and chemical products group declined by 0.6 per cent and transport equipment and parts declined by 0.5 per cent during the week.

However, the prices of non-food articles group rose by 0.1 per cent due to higher prices of fodder, groundnut seed, gingelly seed and raw cotton.

In the manufactured products category, atta (by 2 per cent), groundnut oil and ghee (by one per cent) and cotton seed oil became dearer during the week.

The inflation data of the week does not capture the impact of four per cent excise cut across the board announced last week on December 7 as a part of the stimulus package to revive the slowing Indian economy.

The inflation for the week ended October 11 stood at 11.30 per cent, up from the provisional estimates of 11.07 per cent.

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