Inflation rate continues to decline and currently stands at a 10-month low of 6.38%. It stood at 6.61 per cent last week and eased marginally following the decline in prices of almost all primary, manufactured and food articles. The inflation rate touched the peak level of 12.92 per cent in the first week of august, leading to tight monetary policy by the Reserve Bank of India to control price rising.

Recent decline in price rising gives enough room to the RBI to cut interest rates and improve liquidity condition in the market. Experts believe that inflation rate may further slide in the coming times as crude rates are declined to their lowest level of $40/barrel from the peak of $147.

The Managing director of IDBI Gilts, N S Venkatesh said, "As there have been signals from the government that the rate cuts will not be as deep as the markets may have expected, there may not be further downside to the yields of ten-year bonds or rate swaps till the cuts take place."

Prices of all three major segments of the wholesale price index (WPI), namely primary articles, fuel and manufactured products showed decline in the reporting week. Cheep rates of Jet fuel and diesel contributed to ease the inflation rate. Prices of food articles are still increasing as per the data released by the Finance Ministry.

Chief economic advisor in the finance ministry, Arvind Virmani said that improvement in standard of rural life of the country may be a reason for the increase in food prices. He hoped that prices would be controlled soon as country's agricultural output has shown increase in this fiscal.