The annual Wholesale Price Index-based inflation rate declined marginally to 6.61% for the week ended December 13. It stood at 6.84 per cent in the previous week. The decrease in inflation rate brings respite for the apex bank and the Union Government who are endeavoring to stabilize prices in the market.

The recent decline is mainly due to excise duty cut on various manufacturing products and decline in prices of petroleum products. The government had cut the central value-added tax on manufactured items by four percentage points on December 7 as part of an economic stimulus package.

The inflation of primary articles increased to 12.15 percent against 11.85 percent last week. Prices of food articles increased to 10.46 per cent as compared to 2.33 per cent in the corresponding week a year ago.

Experts believe that inflation may further decline by the end of this financial year. It may provide enough room for the reserve bank to further ease interest rates to propel economic growth of the country. The chief economist at Yes Bank, Shubhada Rao said, "We expect the monetary policy to ease in the January policy review. We expect a
100 basis-point cut in the repo (rate) and a 50 basis-point cut in the reverse repo (rate) for the rest of the fiscal year."