Inflation slips below 5 per cent

Continuing its southward journey, inflation fell further to 4.39% during the week ended January 31 from 5.07% a week earlier. This is the lowest rise since January 12 last year, when inflation was at 4.36%. (Watch)

Earlier a Reuters poll predicted that the inflation rate was expected to have fallen to its lowest in just over a year at the end of January due to a cut in fuel prices.

The median forecast of 11 analysts was for a 4.43% rise in the wholesale price index in the 12 months to January 31, compared with 5.07% in the previous week.

Earlier Shubhada Rao, chief economist at Yes Bank, said, "We have seen almost an 18 point correction in the fuel price index, which is essentially being the driver of this week's inflation number."

The government cut retail fuel prices by up to 11% in the last week of January, its second reduction in nearly two months.

Inflation had raced into double digits in June last year after the government raised fuel prices, and peaked at 12.91% on August 2.

The RBI expects annual inflation to be below 3% by the end of the 2008/09 fiscal year in March, with some analysts even expecting it to be below 2%.