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India's inflation rate likely to be stable

India's year-on-year inflation rate rose marginally in the week ended May 26 but analysts said these were seasonal variations and the index would remain stable in coming months.

Data released by the commerce and industry ministry on Sunday showed the inflation rate, as measured by the wholesale price index, grew to 5.52 per cent in the week from 5.46 per cent in the previous week.

The rate was 6.59 per cent in the corresponding week last year.

"The present rise is due to minor seasonal variations. There are no structural reasons for a further rise," D K Srivastava, economist with the New Delhi-based National Institute of Public Finance and Policy said.

He said these variations would "cycle out" in the coming weeks as there was no reason for a consistent rise in the index.

The official wholesale price index for all commodities for the week ended May 26 stood at 160.5 as against 160.3 for the previous week.

Srivastava said the inflation rate was likely to hover around 5-6 per cent levels in the coming months with an average of five and half per cent for the full year.

India's inflation rate has been near the present levels after hitting 10-year highs in February. It touched 8.57 per cent in the week ended February 10.

Analysts and industry groups have been urging the government to cut interest rates to take advantage of the low headline inflation rate and give a boost to the sluggish economy.

Srivastava said there was little possibility of a pressure on prices in the coming months as there was excess foodgrain stocks and low demand for manufactured goods.

The index for the manufactured goods remained static at the previous week's level of 144.0. Same was with the index of fuel, power, light and lubricants, which remained static at last week's level of 222.7.

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