Indian wholesale prices rose 5.01 percent in the 12 months to February 5, slowing from the previous week's 5.25 percent due to lower agriculture produce prices and last year's high base, the government said on Friday. The inflation rate was at 6.15 percent during the corresponding week of the previous year. Economists say the gradual easing of price pressures should persuade the central bank to leave interest rates unchanged for the next few months.

Inflation has fallen for the 11th straight week and is the lowest since May. The latest inflation rate was below a Reuters poll estimate of 5.06 percent.

The index for primary articles fell 0.1 percent to 184.9 from 185.

The index for manufactured products remained unchanged at last week's level of 167.5.

The non-food articles group declined 0.6 percent to 180.4 from 181.4 due to lower prices of soybean, oilseeds, fruits and vegetables. "I am surprised by the decline. There is some under-recovery of petroleum prices in the inflation data. But overall, it is good news.

"By March-end, I expect the inflation rate at 5.0-5.5 percent but the rising oil prices remain a concern and one has to watch the oil prices which have started going up in the last four, five days."

"Our expectation was slightly higher so we need to see which specific components have helped in lowering the headline number. Going forward, we expect the rate should remain in this range of 5.0 to 5.5 percent."

"The data is in line with expectations. With oil prices coming off, the outlook for inflation looks benign. We can expect inflation to be below 5 percent levels by the fiscal year-end."

Copyright Reuters, 2005