The 0.23 per cent dip from 12.63 per cent in the previous week is the first time that inflation has fallen in a month.

It was 3.99 per cent during the corresponding week a year ago.

"There are some early signs of moderation of inflation," the Finance Ministry said in a statement, adding that in the primary articles group 21 out of total 98 articles have shown decline in prices and there was no increase in prices of another 48 articles.

The last time inflation fell was when it dipped from 11.91 per cent to 11.89 per cent in the week ended July 12.

In addition to vegetables, meat, egg and fish, the index of fuel and power items too declined by 1 per cent.

Prices of certain essential commodities like pulses, fruits, spices and iron and steel, however, continued to move up during the week. The increase was due to higher prices of sugar, pulses (moon, massor, urad and gram and dry chillis), the Finance Ministry statement said.