A Thursday release by the Commerce Ministry revealed that the annual rate of inflation rose to 0.92 percent in the week ended October 3, vis-à-vis the week-before figures of 0.70 percent, even though there was a fall in the prices of key food items which were at a high of 16.3 percent in mid-September.

For the week under consideration, the prices across the three leading product categories - primary articles, manufactured products and fuel - showed a notable decline.

The prices of vegetables dropped almost 14 percent following the revival of monsoon from mid-August, which resulted in better vegetable yields. The prices of fruits, cereals and pulses also showed a fall in a week-over-week analysis.

The decline in food prices on weekly basis might help the Reserve Bank of India (RBI) to hold policy rates in its October 27 monetary review.

Meanwhile, the rates of the non-processed food items were higher by 13.34 percent as against the previous-year same week, thought these items showed a week-on-week decline in prices by
1.67 percent.

Though prices of manufactured items and fuel also fell during the week, most economists - including C Rangarajan, the Chairman of the Prime Minister's Economic Advisory Council - opine that with the recovery in the economy gathering momentum, inflation will further speed up and will likely breach RBI's estimates of 5 percent by the end of this fiscal.