Mumbai: The annual rate of inflation based on the wholesale price index fell to 4.80 per cent in the week ended June 2 – its lowest in 10 months and well within the Reserve Bank''s ceiling of 5.0 per cent.

The inflation rate stood at 4.80 per cent in the 12 months to June 2, slowing from 4.85 per cent a week earlier and well below a two-year high of 6.69 per cent in January.

For the week ended June 2, the inflation index of manufactured product prices rose 0.2 per cent while the index of foodgrains, including cereals and pulses, fell 0.1 per cent.

Among food articles, prices of moong, bajra, sooji, atta, maida declined. However, gram, soyabean oil and imported edible oil became dearer.

During the week, aviation turbine fuel and furnace oil got costlier while prices of manufactured items like lead ingot and wires and cables also increased.

To check prices of food grains, which have risen at almost twice the pace of manufactured product costs over the past year, the government removed the import duty on lentils in June 2006, and on wheat in September.

The Reserve Bank of India, which has raised its key interest rates nine times since October 2004, will announce its next monetary policy on July 31. The central bank can announce rate changes before the scheduled monetary policy review, as it has done three times since December.

To combat inflation, the Reserve Bank has also allowed the rupee to gain to near a nine-year high to make imports cheaper. It has slowed dollar purchases on concern rupee funds injected from the exercise will stoke inflation.