Inflation declined to a five-and-a-half year low of 0.39 per cent in January on the back of a sharp decline in prices of fuel and manufacturing products.
However, the food prices remained high, according to the the data released by the commerce and industry ministry showed.
According to the Wholesale Price Index (WPI), which gauges the headline inflation, while fuel prices declined by 10.69 per cent in January compared to a decline of 7.82 per cent in December, the rate of price rise in manufactured products was 1.05 per cent compared to 1.57 per cent in the previous month.
The Sensex was up by 117 points or 0.4 per cent in the afternoon trading hours following the WPI data.
However, the food inflation continued to remain high at 8 per cent compared to 5.20 per cent in December as pulses, vegetables and cereals became dearer.
The WPI stood at 0.11 per cent in December while the November data was revised downwards to a negative 0.17 per cent from the provisional estimate of zero, the data showed.
The data comes after the index of industrial production showed a growth of only 1.7 per cent in December while retail inflation stood at 5.11 per cent, well below the RBI’s comfort level of 6 per cent.