New Delhi (PTI): In the midst of an onslaught of bad news, the government on Friday received some good news as inflation fell to 11.80 per cent, a development that could help the authorities ease liquidity and interest rate.

Beating expectations, the rate of price rise, measured by the wholesale price index, declined by 0.19 per cent for the week ended September 27 from the preceeding week due to lower prices of food articles like fruits, vegetables, cereals, pulses and some manufactured items.

Inflation has remained below 12 per cent for two straight weeks now, after hovering over 12 per cent for nearly three months.

The Finance Ministry, however, said in a statement that inflation of 30 essential commodities marginally increased to 7.74 per cent in the latest week under review, from 7.70 per cent in the preceeding week. Among these, seven items recorded a fall in their prices, while that of 16 others remained unchanged.

"Price moderation is more than expected. This is due to lot of seasonal effect and reasonably good harvest," HDFC Bank Chief Economist Abheek Barua said.

However, a strong base effect may lead it to cross 12 per cent again in the coming weeks, Barua said. A fall in inflation may prompt RBI to cut repo rate by 25 basis point in the mid-term review later this month.

The prices of fruits and vegetables during the week into consuderation declined by one per cent, cereals and pulses by 0.1 per cent and ground nut by two per cent.

Among food articles, milk prices rose by one per cent, while prices of imported edible oil soared by 5 per cent.

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