Retail inflation fell for the second consecutive month and eased to 24-month low of 8.79 per cent in January mainly due to a drop in food prices.
Inflation as measured by the Consumer Price Index (CPI) for December was 9.87 per cent down from 11.16 per cent in the previous month.
Inflation in the food and beverages segment was 9.9 per cent in January compared to 12.16 per cent in the previous month, as per the official data released today.
It is lowest rate of inflation since 7.65 per cent in January 2012.
Vegetable prices on annual basis rose 21.91 per cent in January, a slower pace than 38.76 per cent recorded in the previous month, it said.
Fruit prices rose 15.6 per cent as compared to 14.64 per cent in December.
Pulses were dearer by 2.59 per cent, cereals by 11.42 per cent and milk products by 9.82 per cent in January.
Protein-rich items such as eggs, meat and fish became dearer by 11.69 per cent in January. The rate of inflation in this segment was slightly higher at 12.64 per cent in December.
The retail inflation was in double digits in October and November.
The data showed that the provisional inflation for rural and urban areas for January was 9.43 per cent and 8.09 per cent, respectively.
Data on inflation based on the wholesale price index is scheduled for release on Friday.
The Reserve Bank factors both, retail and wholesale price based, inflation data in its monetary policy.
Recently, a RBI appointed committee has suggested the central bank should focus on CPI inflation and aim to bring it down to 8 per cent by January next year, and to 6 per cent by January 2016.
Shifting its stance of monetary policy towards targeting retail inflation, the RBI in its monetary policy said inflation an "inequitable tax" and may exceed 8 per cent by March end.