Inflation based on movement in the Wholesale Price Index (WPI) came down to 4.68 per cent in February, from 7.28 per cent a year ago. It was 5.05 per cent in January 2014.
"Need to watch inflation carefully... Happy that overall inflation is coming down," Finance Minister P Chidambaram said while expressing satisfaction over improvement in the price situation ahead of the general elections.
Inflation, which is on decline since December, was 5.05 per cent in January. Prior to February, the lowest WPI was recorded in May 2013 at 4.58 per cent. In June, it had inched up again to 5.16 per cent.
As per the data released today, rate of price rise for onions - on annual basis - contracted 20.06 per cent in February. Similarly rate of price rise in potato slowed to 8.36 per cent.
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However, fruits, milk and other protein-rich items like egg, fish and meat became costlier in February compared to the previous month.
Inflation in the manufactured items, like sugar and edible items, was 2.76 same as in January.
Commenting on the fall in WPI inflation, Deputy Chairman of Planning Commission Montek Singh Ahluwalia said: "This is clearly a good news. It shows that this area (price situation) which was not an area that we were comfortable, is now getting into more comfortable range.