Food inflation eased sharply to 1.81 per cent in the week ended December 10, from the previous week's annual rise of 4.35 per cent, largely on account of the high base effect of the previous year. The continuing slide in vegetables and cereals too contributed to the dip in the year-on-year food inflation rate.

Inflation in non-food items too came down sharply, even as fuels held steady, Government data showed on Thursday.

The latest estimate, according to analysts, is the lowest food inflation estimate since the week ended February 9, 2008, when it was recorded at 2.26 per cent. The dip happened despite a sharp surge in the year-on-year inflation in pulses and other protein-based food items.

On a sequential basis, the food articles group index declined 0.5 per cent during the latest week. Food inflation stood at a high 13.22 per cent in the corresponding week of 2010.

Other items surge

According to the official data, onions were down over 49 per cent year-on-year during the week under review, while potatoes fell by over 34 per cent. Wheat prices also came down by 4.21 per cent. Overall, vegetables were cheaper by 26.37 per cent.

Most other food items, however, surged on an annual basis, led by protein-based items. Pulses were up over 14 per cent during the week under review, while milk was up 11 per cent and eggs, meat and fish by over 9 per cent. Fruits were also up nearly nine per cent on an annual basis.

Inflation in the primary articles group stood at 3.78 per cent during the week ended December 10, against 5.48 per cent in the previous week. Primary articles have an over 20 per cent weight in the WPI. Inflation in the non-food segment, which includes fibres and oilseeds, was recorded at 1.37 per cent during the week under review, against 2.12 per cent in the previous reported week.

The fuel and power inflation was steady at 15.24 per cent during the latest week. The country's headline inflation has stayed above nine per cent for a year, despite 13 rate increases by the RBI since March 2010.

In its second quarterly review of the monetary policy last month, the central bank had said it expects inflation to remain elevated till December on account of the demand-supply mismatch before moderating to seven per cent by March 2012.