India's inflation rate fell to 8.66% during April but economists warned that high oil and commodity prices will likely knock up prices of most manufactured items in the coming months.
Wholesale prices-based inflation rate was 9.04% in March.
Oil companies' decision to raise petrol prices by R 5 per litre on Saturday and a possible hike in the prices of diesel and LPG will further raise the inflation rate in the coming months, economists said.
An empowered group of ministers is expected to consider a Rs 4 per litre increase in diesel prices and Rs 20-25 per cylinder hike in liquefied petroleum gas (LPG) prices.
Finance minister Pranab Mukherjee said that enhanced food supplies will bring down prices of staple items, but prices of non-food articles continue to remain a key worry. "Inflation in non-food articles is a continued source of concern," Mukherjee said in a statement.
"It (non-food inflation) remains elevated at over 27% in April. Sustained high non-food primary prices create cost-push inflationary conditions in the manufacturing sector," he said.
High food and commodity prices are fanning prices of most manufactured goods, besides posing a threat to the broader economic expansion.