Riding on the back of easing food prices, the Wholesale Price Index-based inflation stood at 6.87 per cent in July this year against 9.36 per cent in July last year.
The inflation rate was 7.25 per cent in June.
Overall, food inflation declined to 10.06 per cent in July from 10.81 per cent in June.
Despite easing food prices, pressure remained on pulses, vegetables and potatoes.
Potatoes turned costlier by 73 per cent, pulses by 28.26 per cent and vegetables by 24.11 per cent on annual basis.
Eggs, meat and fish prices were up by 16 per cent and milk by 8.01 per cent.
Inflation in onions and fruits was in the negative zone at (-) 9.81 per cent and (-) 0.15 per cent.
Manufactured products category saw some heating up with the prices rising by 5.58 per cent against 5 per cent in June.
There were significant price rise in cotton textiles, cement and lime, non-metallic mineral products and sugar over the past six months.
Fuel and power prices eased from 12.04 per cent last July to 5.98 per cent in July 2012.
Among the non-food articles, inflation in oilseeds was high at 25.22 per cent and minerals at 8.43 per cent.