NEW DELHI, Oct 5: Indian inflation nudged higher this week, according to official data on Friday, dimming hopes of any easing of interest rates which are riding at five-year highs.

Inflation rose nearly two-tenths of a percentage point to 3.42 per cent for the week ended Sept 22 from 3.23 per cent in the previous week, mainly due to a rise in prices of manufactured items and some food products.

The increase surprised analysts who expected the rate to remain broadly in line with last week’s level. However, inflation remained below RBI’s expectation of close to five per cent for the current fiscal year to March.

The wholesale price-based index stood at 5.43 percent in the corresponding week a year ago.

Economists said they expect no early lowering of interest rates amid worries that record global oil prices could trigger a rise in state-set domestic fuel prices which could push inflation upwards closer to five per cent.

The bank, which is to announce its latest monetary policy on Oct 30, is expected to keep a “neutral stance” on interest rates, but could hike the cash reserve ratio (CRR) in a bid to stem credit growth that can fuel inflation.—AFP