Sliding for the third straight week, food inflation fell to 12.85 per cent for the week ended October 23 as prices of vegetables, especially potato and onion, softened due to improved supplies.

Food inflation stood at 13.75 per cent for the week ended October 16, government data showed.

On annual basis, potato prices were sharply down by 51.22 per cent and vegetables became cheaper by 4.20 per cent. Also onion prices eased by 0.13 per cent.

However, other essential items like cereals, milk and fruits continued to remain costly.

On annual basis, cereals prices rose by 4.07 per cent.

While pulses became costlier by 0.67 per cent on a yearly basis, wheat and rice prices increased by 4.36 per cent and 3.17 per cent, respectively.

Among other food items, milk prices soared by 21.72 per cent during the week compared to the same period last year, while fruit rates rose by 16.03 per cent.

Egg, meat and fish became dearer by 28.85 per cent on an annual basis.

Although prices of some perishable food items are easing, however demand supply mismatch persist in several essential commodities.

 "Notwithstanding some moderation, food price inflation has remained persistently elevated for over a year now, reflecting in part the structural demand-supply mismatches in several commodities," RBI had said in its second quarter review of monetary policy on Tuesday.

After some moderation in July, food inflation remained high during August and September due to supply disruptions, caused by heavy monsoons.