The Confederation of Indian Industry today said the sharp decline in inflation for the week ending 6 December was the silver lining in the current economic slowdown.

Reacting to the latest economic data, the industry body said that the more than expected fall in inflation rate provides a manoeuvring space to RBI for further interest rate cuts.

Given that RBI's policy endeavor was to bring the inflation level down to 7 per cent  by March 2009, the inflation figure of 6.84 per cent  provides the government an opportunity to take various fiscal and monetary measures.

The nine-month low inflation rate dipped by 1.16  per cent  from the previous week's level of 8.0 per cent  and has been triggered largely by the petrol and diesel prices cut.

CII believes that the slackening consumer demand can be met by easing monetary supply to push growth within the existing comfortable inflation zone.

Inflation, which has fallen mainly on account of the fall in commodity prices in the international market, can also help the government take tax measures to provide greater income in the hands of people.

"The steps will not only boost the domestic demand but also uplift the low confidence sentiment across various stakeholders in the economy," the industry body said in a statement.