Consumer price inflation in the country eased for the fifth consecutive month, falling to a 3-year low of 3.41 per cent in December from 3.63 per cent the previous month, in part due to the cash crunch following the 8 November demonetisation of the bulk of the currency in circulation.
At 3.41 per cent India's consumer price inflation is at its lowest since January 2014, provisional data released by the Central Statistics Office (CSO) showed.
The December fall in inflation has been mainly on account of falling prices of vegetables and pulses. The cost of vegetables dropped by 14.5 per cent year on year, while that of pulses and related products fell by 1.57 per cent.
Food inflation in December stood at 1.37 in December 2016 against 2.11 per cent in November and 6.40 per cent in December last year.
Consumer price inflation for the rural areas stood at 3.83 per cent in December 2016 against 4.13 per cent in November 2016 and 6.32 per cent in December 2015.
Food price inflation for the rural areas stood at 2.06 per cent in December 2016 against 2.87 in November and 6.40 pr cent in December 2015.
Consumer price inflation for urban areas stood at 2.90 per cent in December 2016 against 3.05 per cent in November and 4.37 per cent in December 2015.
Food price inflation in urban areas stood at 0.15 per cent in December against 0.75 per cent in November and 6.31 per cent in December 2015.
Analysts see the fall in inflation as mostly a reaction to the demonetisation that brought about a cash crunch that left perishable prices crashing.
A good pulses crop also helped to cool inflation due to a demand contraction.