In the midst of expectations of inflation turning negative, it rose to 0.57 per cent, the increase being for the second consecutive week, on the back of costlier food and other items, but still remained close to a three-decade low.
Inflation rose by 0.31 percentage points for the week ended April 18 over the previous week, despite a high base effect of 8.23 per cent during the corresponding week of last year.
"The increase in inflation over the previous week is due to food prices, which have been showing some rise and the rise was expected," the Prime Minister's Economic Advisory Council Chairman, Suresh Tendulkar, said.
However, during the Lok Sabha elections, currently under way, rising food prices have remained overshadowed in the campaigning of parties because of issues like Bofors, terror and the Supreme Court's order for inquiry into the role of some politicians during the post-Godhra riots in Gujarat.
Besides food prices, manufactured and fuel items turned costlier during the week. On a weekly basis, food articles found in raw form rose 0.6 per cent, but turned expensive by 7.39 per cent year-on-year.
Prices of manufactured food items were up 1.9 per cent week-on-week, but rose 11.38 per cent on a yearly basis.
Many analysts had predicted inflation to turn negative by the end of last fiscal.
Some economists said costly food items have come in the way of inflation turing negative, and the high base effect is sure to drive inflation below zero shortly.
"I expect inflation to get into the negative zone and remain (there) for some months," said D K Joshi, Principal Economist at ratings agency Crisil.
The rise in inflation over the previous week is just a blip and inflation is expected to go down, he said, adding that he didn't see any further upside in food prices.
However, Suresh Tendulkar is not of the same view. "I don't see inflation going below zero," he said.
As per the data year-on-year, the prices of cereals increased 10.29 per cent, pulses 12.62 per cent, vegetables 9.91 per cent, fruit 8.03 per cent, milk 5.46 per cent and condiments and spices 9.13 per cent.
Among manufactured food products, the prices of processed fish shot up 42.75 per cent, sugar 22.49 per cent and common salt 12.35 per cent.
The prices of oil cakes rose 25.66 per cent, tea and coffee 14.44 per cent and malt liquor 25.40 per cent.
Meanwhile, the prices of aviation turbine fuel went up 8 per cent, furnace oil 2 per cent and metallic minerals as much as 25 per cent over the previous week.
The Reserve Bank in its monetary policy statement on April 21 had said that the expected negative inflation has only statistical significance and is not a reflection of demand contraction.
Warning that the trend should not be treated as deflation for monetary policy purposes, the RBI had said the transitory WPI inflation in negative zone may not persist beyond the middle of 2009-10.
In the policy, the central bank had cut its short-term lending (repo) and borrowing (reverse repo) rates by 25 basis points each, lower than the market expectation, reflecting a cautious approach in the backdrop of rising food prices.
Rejecting any further cuts by the Reserve Bank, Tendulkar said, "RBI will wait and see. Lower interest rate regime has already been kicked in with public sector banks cutting their interest rates. It will help the growth process."
However, Joshi hopes RBI to further cut rates. "I expect RBI to continue to maintain its soft interest rate regime. It will cut rates in small doses. I expect another 25 basis points cuts by the next policy," Joshi said.
Meanwhile, inflation for the week ending February 21 has been revised downwards to 2.99 per cent from 3.03 per cent estimated provisionally.
