Mumbai: The annual rate of inflation based on the wholesale price index fell for the third successive week, hitting 12.10 per cent for the week ended 30 August down from 12.34 per cent in the previous week and 12.63 per cent for the week ended 9 August.

For the 'primary articles' group, the annual point-to-point inflation declined to 10.07 per cent, as compared to 10.79 per cent last week and 11.83 per cent for the week ended 9 August, the finance ministry said in a release.

Out of a total of 98 articles, 19 articles have shown a decline in prices in the current week as compared to 16 August. These included among others, rice, maize, moong, masur, and gram, onions and potatoes, dry chillies, cardamom, pineapple, papaya and cabbage. Another 61 articles have shown no increase in prices, the release said.

In the commodity group 'fuel and power', though the rate of inflation marginally increased to 16.94 per cent as of 30 August from 16.69 per cent a week earlier, prices of all the 19 commodities in this group remained unchanged in the current week.

In the case of 'manufactured products', rate of inflation declined to 11.07 per cent, as compared to 11.28 per cent in previous weeks.

Out of 318 commodities, 296 have shown no increase in prices over the last week. In the case of 8 commodities, there has been a decline in prices. These commodities include edible oils (mustard oil, imported oils and gingelly oil), zinc ingots, caustic soda, BOPP films and synthetic yarn.

Only 14 products, particularly sugar, khandsari and gur, cement, hessian bags, groundnut oil, zinc and lead ingots, deoiled and groundnut cake, salt, cotton grey cloth, tyre cord fabric, mixed fabrics and acids witnessed an increase in prices, the release noted.

Prices of 30 essential commodities, however, increased to 7.52 per cent as of 30 August from 6.90 per cent reported in the earlier week. There was an increase in the prices of sugar, salt, wheat, arhar, urad, jowar and bajra in the current week.

The inflation rate for the week ended 5 July has been revised to 12.19 per cent as compared to the earlier 11.91 per cent.

Analysts expect the Reserve Bank to tighten monetary policy at least one more time to get inflation under control before gradually starting to lower interest rates, most likely in 2009.

Suresh Tendulkar, the chief of prime minister Manmohan Singh's Economic Advisory Council, however, said there could be a pause in the monetary tightening by the Reserve Bank of India and the inflation rate might have peaked.

The rupee, meanwhile, dropped to its lowest in nearly two years on Thursday as a falling stock market fueled concerns of foreigners withdrawing investments.

The rupee was at 45.56/57 per dollar, close to a low of 45.58, its weakest since 12 October 2006 and 1 per cent weaker than Wednesday's close of 45.12/13.

At its low, the rupee had shed 3.6 per cent in September and 13.5 per cent in 2008.