NEW DELHI, Jan 4: India’s inflation rate edged higher to 3.5 per cent as vegetables became costlier, official data showed on Friday.

Annual inflation rose to 3.5 per cent for the week ended December 22 from 3.45 per cent a week earlier, according to the wholesale price index, India’s most watched cost-of-living monitor.

Annual inflation stood at 5.73 per cent in the same period a year earlier.

Inflation has fluctuated in recent weeks but stayed well below the central bank’s target of close to five per cent for the fiscal year to March 31, 2008.

Analysts say they expect no swift cut in interest rates as the central bank fears high global oil prices could trigger a rise in state-set domestic fuel prices and is concerned about strong world commodity prices.

Global crude prices crossed 100 dollars a barrel earlier this week.

India’s crude costs have shot up by around 150 per cent since April 2004 but retail petrol prices have risen by just 29 per cent.

The price caps are costing state-run oil retailers around 50 million dollars a day.

On Thursday, Petroleum Minister Murli Deora said the government would consider all options, including raising fuel prices and a cut in duties, to reduce losses of state-run oil firms.

Growth for the first half of the fiscal year to March 31, 2008 was 9.1 per cent.

But economists expect the economy to lose pace in coming months as the effects of aggressive monetary tightening to curb prices take hold.—AFP