India's inflation rate dipped to 8.40% for the week ended November 22nd from 8.84% in the previous week despite of the higher prices of primary food items. The fall has been attributed to lower prices of non-administered fuel products and certain manufactured food items.

Chief economist at Yes Bank, Shubhada Rao said that the primary articles that include cereals, pulses, fruits, vegetables and oilseeds were facing upward pressure on prices. "ATF (aviation turbine fuel) may bring the fuel index marginally lower, while manufacturing is seen stable to slightly soft," she said.

The wholesale based Price Index-based inflation has come down to a seven month low level after dipping for four consecutive weeks. The cooling inflation effect induces Reserve Bank of India (RBI) to go in for further policy rate cuts aimed at providing increased bank credit at lower rates of interest. This is the reason that economist expect inflation rate to decline even in the coming times.

Earlier in June, inflation had hit to a double digit figure and remained well above 12% for several weeks until September 20th, when it declined to 11.99%.

RBI has keen to boost the economic growth in the country and therefore is expected to take several monetary policy measures. In fact the RBI measures are likely to form a part of the fiscal stimulus package to be declared by the Government to advance various sectors of the economy which are facing a demand crunch following the global financial crisis. These sectors include housing, auto, export, small and medium enterprises (SMEs) and other labour-intensive industries.