Food inflation entered the negative zone at (-) 3.36% for the week ended December 24 as prices of essential items like vegetables, onion, potato and wheat declined.
"There has been substantial improvement. Food inflation has turned negative for the first time in recent memory," Finance Minister Pranab Mukherjee told reporters here.
This is the first time in almost six years, for which data with base year 2004-05 is available, that food inflation has shown a decline on an annual basis.
Food inflation, as measured by Wholesale Price Index (WPI), stood at 0.42% in the previous week. It was almost 21% in the corresponding week of 2010.
According to the official data released today, onion became cheaper by 73.74% year-on-year during the week under review, while potato prices were down by 34.01%. Prices of wheat also fell by 3.41%.
Overall, vegetables became 50.22% cheaper during the week ended December 24.
The fall in the rate of price rise of food items has been substantial since the first week of November, when it stood at double-digit.
Experts feel that the decline in food inflation will be a major incentive for the Reserve Bank to look at the option of key interest rate cuts at its next quarterly monetary policy review later this month.