The wholesale price-based inflation declined to over two-year low of 3.85 per cent in January on easing prices of manufactured items, fuel and power, even though food articles remained expensive.
This is the ninth straight month of decline in the rate of wholesale price-index (WPI) based inflation.
The WPI inflation was 4.73 per cent in January and 13.43 per cent in February, last year.
"Decline in the rate of inflation in February 2023 is primarily contributed by fall in prices of crude petroleum & natural gas, non-food articles, food products, minerals, computer, electronic & optical products, chemicals & chemical products, electrical equipment and motor vehicles, trailers & semi-trailers," the commerce and industry ministry said on Tuesday.
The 3.85 per cent WPI inflation is the lowest since January 2021, when the rate of price rise on wholesale basis was 2.51 per cent.
The decline in the rate of price rise was mainly due to a favourable base effect, economists said, adding that going forward, softening commodity prices would help ease WPI inflation further.
However, the future course of food inflation would depend on weather related conditions and timely monsoon.
Although inflation in manufactured items softened, in the case of food articles it rose to 3.81 per cent in February, from 2.38 per cent in January.
Inflation in pulses was 2.59 per cent, while in vegetables was (-)21.53 per cent. Inflation in oil seeds was (-)7.38 per cent in February 2023.
Fuel and power basket inflation eased to 14.82 per cent, from 15.15 per cent in the preceding month.
In manufactured products it was 1.94 per cent, against 2.99 per cent in January.
The deceleration in WPI comes in line with the dip in retail inflation, data of which was released on Monday.
Consumer price index based retail inflation declined to 6.44 per cent in February from 6.52 per cent in January.
In its monetary policy review last month, the RBI had hiked the key interest rate by 25 basis points to 6.50 per cent, saying core inflation still remains sticky.
Economists have predicted RBI to raise interest rates by another 25 basis points in the policy review next month.