Inflation in wholesale market, which is a marker of price rise has come below expectations as a Reuters poll of economists had predicted WPI inflation at 4 per cent.
Inflation based on wholesale prices eased to 3.58 percent in December, government data showed on Monday.
Vegetables too witnessed some softening with annual inflation at 56.46 per cent in December as against 59.80 per cent in the previous month.
Nonetheless, the rate was well above the 2.1 percent growth logged in the corresponding period of 2016.
The index for primary articles (weight 22.62 per cent) declined by 2.9 per cent to 131.7 from 135.6 for the previous month.
The index for "Food Articles" group declined by 4.3% to 144.1 (provisional) from 150.6 (provisional) for the previous month due to lower price of fruits & vegetables (14%), peas/chawali (6%), gram and egg (5% each), rajma and poultry chicken (4% each), coffee and fish-inland (3% each), urad and tea (2% each) and maize and masur (1% each).
Data released by the Central Statistics Office (CSO) on Friday showed inflation measured by the Consumer Price Index (CPI) accelerated to a 17-month high at 5.21% in December from 4.88% a month ago. However, the price of natural gas (1%) declined.
While "Crude Petroleum & Natural Gas" group rose by 4.8% to 78.1 (provisional) from 74.5 (provisional) for the previous month due to higher price of crude petroleum (7%).
The index for manufactured products (weight 64.23 per cent) for December 2017 rose by 0.1 per cent to 114.0 from 113.9 for the previous month. The index for "Manufacturing of Wearing Apparel" group rose by 1 per cent to 138.9 in December.
"The policymakers need to take care of the continuous rise in petrol and high speed diesel prices due to rise in global crude oil prices which may have an impact on import bills and subsequent impact on exchange rates", said Assocham Secretary General D S Rawat.
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