India's annual inflation rate has moderated to the level of 7.25 per cent in June during the month of June, according to the latest data released by the authorities. The government has also revised April inflation reading to 7.50% from the 7.23% reported earlier.

The inflation fell mainly due to the slight moderation in manufactured items. However, the prices of vegetables, wheat and pulses increased during the month. The Wholesale Price Index (WPI), was 7.55 per cent in May and was at 9.51 per cent in the June of 2011.

The food inflation rose to 10.81 per cent in June, from 10.74 per cent in May. Meanwhile, the inflation fro manufactured products was recorded at 5 per cent in June.

Even as the inflation has moderated, it has remained above the comfort level of the central bank, and thus it might make it difficult for the central bank to reduce its key interest rates. Industry payers believe that rate cut by the central bank will give a much needed boost to the Indian economy, which has been facing a slowdown recently.

The Reserve Bank of India (RBI) believes that the inflation rate is too high for reducing interest rates, according to analysts. Following weak industrial production data as well as a general slowdown in the economy, the government has urged the central bank of the country, the Reserve Bank of India (RBI) to consider reducing its interest rates during its policy review on July 31.