Inflation dips further to 6.61%

The headline inflation fell further to 6.61% during the week ended December 13 from 6.84 per cent a week earlier. Inflation for the week ended October 18 was revised to 10.82%.

The government reduced factory the central value-added tax (CENVAT) on a wide range of manufactured items by 4 percentage points on December 7.

Inflation raced into double digits in June after the government lifted state-set fuel rates and fast-rising commodity prices took it to 12.91 percent on Aug. 2, forcing the central bank to raise its main lending rate to a seven-year high of 9 percent.

It has since aggressively cut the repo rate by 250 basis points as the global financial crisis and high borrowing costs have slowed growth in Asia's third-largest economy. Prices of petrol were cut by 10 percent with effect from Dec. 6, while diesel became 6 percent cheaper, contributing to a sharp fall in the index in the previous week. Prices of other fuels are market determined and linked to the price of crude oil.

The wholesale price index is more closely watched than the consumer price index (CPI) because it includes more products and is also published weekly.