New Delhi  - India's inflation rate fell to a near seven-year low of 2.43 per cent in the last week of February, even as the country's industrial output declined half a per cent, government data showed Thursday.

The weekly inflation rate, linked to the wholesale price index, is the lowest since June 2002. The figure stood at 3.03 per cent in the week ending February 21.

The main reasons for the fall in inflation are lower commodity and crude oil prices.

The sharp decline of inflation from 12.91 per cent in August 2008 to below 2.5 per cent augurs well for the ruling United Progressive Alliance government which faces general elections in April.

The Federal Reserve Bank of India had predicted that inflation would drop to below 3 per cent by the end of India's financial year on March 31. The Indian financial year runs from April 1 to March 31.

India's benchmark 30-share Sensex index of the Bombay Stock Exchange, which opened strong Thursday, gained 2.12 per cent as the figures were released around noon.

The index was quoted at 8,333.24, up 172.84 points, at 12.45 pm (0715 GMT).

Similarly, the broader 50-share Nifty of the National Stock Exchange was trading at 2,611.90, a gain of 1.51 per cent around the same time.

Statistics released by the government Thursday also showed the effect of the deepening global economic crisis on India.

The country's industrial production shrank to 0.5 per cent in January 2009 against 6.2 per cent during the same month last year.

India has posted a GDP growth rate of 9 per cent for three years running, but the government has lowered its growth projection for the fiscal year 2008-2009 to 7 per cent. (dpa)