New Delhi, Jan 16 (IANS): India's annual inflation based on the wholesale price index fell to 7.47 percent in December as compared to 9.11 percent in the previous month on the back of a decline in the prices of food products, official data showed Monday.

Inflation was at 9.45 percent during the corresponding month of 2010.

The build up inflation in the financial year so far was 4.95 percent compared to a build up of 7.12 percent in the corresponding period of the previous year, according to data released by the ministry of commerce and industry.

The primary articles inflation fell to 3.07 percent while the food inflation dropped to 0.47 percent. Several food items, including onions, potatoes and other vegetables and wheat, became cheaper year-on-year.

In fact, food inflation was negative in the last two weeks of December.

Annual food inflation was recorded at minus 2.9 percent for the week ended Dec 31 and minus 3.36 percent in the previous week, which was the lowest since April 2006.

Buoyed by the decline in food prices, Finance Minister Pranab Mukherjee last week said overall inflation would come down in the range of 6-7 percent.

The sharp drop in inflation may prompt the Reserve Bank of India (RBI) to cut policy rates in its next monetary policy review next week.

RBI last month kept policy rates unchanged after hiking the key rates 13 times since the beginning of 2010.