Inflation based on wholesale prices eased to 3.58 per cent in December 2017 as prices of food articles declined even as fuel cost witnessed a surge.
Calculated on the basis of Wholesale Price Index (WPI), the inflation was 3.93 per cent in November 2017 and 2.10 per cent in December 2016.
As per government data released today, inflation on food articles slowed to 4.72 per cent in December, from 6.06 per cent in November 2017.
Vegetables too witnessed some softening with annual inflation at 56.46 per cent in December as against 59.80 per cent in the previous month. Kitchen staple onion witnessed a whopping 197.05 per cent price rise in December.
Inflation in protein rich eggs, meat and fish cooled to 1.67 per cent in December, while that in fruits spiked to 11.99 per cent.
In the fuel and power segment, wholesale inflation rose to 9.16 per cent in December, while it was 2.61 per cent for manufactured items.
Data released last week showed that retail inflation breached the RBI's comfort level to touch 5.21 per cent in December on rise in prices of food items, especially vegetables.
The Reserve Bank takes into account retail inflation while deciding on key policy rates.
In its last policy review in December, the RBI had kept key interest rate unchanged. It raised inflation forecast for remainder of the current financial year to 4.3-4.7 per cent, on account of global crude oil prices and implementation of the 7th Pay Commission recommendations.
Meanwhile, inflation for October has been revised upwards to 3.68 per cent from the provisional estimate of 3.59 per cent released earlier.