India's wholesale prices fell to 5.90 per cent in the year to May 10 from 6.03 per cent in the year to May 3, due to lower prices of several manufactured items, the government said on Sunday.
Data released by the commerce and industry ministry mapped a decline in indices tracking wholesale prices of items made from leather, chemicals, rubber and paper, while indices of primary articles like food and oil seeds rose.
The index tracking fuel and power costs remained unchanged.
The inflation figure for the week ending May 10 was in line with a Reuters poll of 10 traders, released on Friday, that estimated the year-on-year change, measured by the widely followed wholesale price index, at an average 5.93 per cent.
Analysts also expect lower inflation, coupled with high market liquidity, to flatten the central bond yield curve this week.
Inflation has steadily eased since hitting a two-year high of 6.47 per cent in the week ended April 12, as the benefit of lower world oil prices after the Iraq war started to kick in, and also because of a fall in vegetable prices following the end of the truckers' strike in late April.
The number is likely to decline further.
"I expect overall inflation to decline to three per cent by March 2004 because prices of edible oils, oilseeds and cotton will be coming off their highs," Saumitra Chaudhuri, economic adviser to ICRA Ltd, told Reuters.
Prices of many farm products have risen sharply due to last year's drought, the worst in 15 years.
Indices showing a rise in wholesale prices included the index for food products that rose 0.9 per cent due to higher rates of canned fish, rape and mustard oil.
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