Food inflation fell to a four-month low of 9.18 per cent for the week ended March 26, but this may not dampen overall inflation much since it is now shifting gears to manufactured prices.
This is the second week in a row that food inflation stayed in single digit as it stood at 9.50 per cent in the previous week.
However, rising input costs for manufactured products may keep overall inflation at elevated level. Overall inflation rose to 8.31 per cent in February from 8.23 per cent a month ago.
As such, Reserve Bank of India (RBI) is expected to continue with its tight monetary stance to tame inflationary expectations in its annual policy for 2011-12, slated for May 3.
The RBI projected overall inflation to be around 8 per cent by this financial year-end, while Finance Minister Pranab Mukherjee expected it to come down to 7.5 per cent.
The figure will be released next week.
