Declining prices of vegetable and other food articles pulled down wholesale inflation sharply to 3.74 per cent in August to a nearly five-year low.
The inflation measured on Wholesale Price Index (WPI) was at 5.19 per cent in July and 6.99 per cent in August 2013.
Inflation in the food segment witnessed a significant decline to 5.15 per cent in August as against 8.43 per cent in the previous month, according to official data released.
The August WPI inflation is the lowest since October 2009 when it stood at 1.8 per cent.
Vegetable prices contracted 4.88 per cent, the third continuous month of decline.
Maintaining a downward trend, the onion prices contracted by 44.7 per cent during the month under review.
However, potato prices were on the rise as inflation in the kitchen essential jumped to 61.61 per cent from 46.41 per cent in July.
Inflation in the fruits basket eased to 20.31 per cent in August.
While prices of protein rich items like egg, meat and fish contracted during the month, inflation in milk and pulses inched up to 12.18 per cent and 7.81 per cent, respectively, as compared to July.
The August retail inflation too eased to 7.8 per cent compared to 7.96 per cent in July. The wholesale WPI data further revealed that the price rise in manufactured goods, like sugar and edible oils too eased to 3.45 per cent in August, while it was 3.67 per cent in July.
Inflation in the fuel and power segment which include LPG, petrol and diesel declined to 4.54 per cent as compared to price rise of 7.40 per cent seen in July.
Meanwhile, wholesale inflation based on final index for June has been revised upwards to 5.66 per cent from the provisional estimate of 5.43 per cent.
The August WPI data is also provisional, the government said.
It also said the buildup inflation rate in the financial year till August is 3 per cent compared to a build up rate of 5.23 per cent in the same period of 2013-14.