For the week ended July 4, the wholesale price index based inflation rate surged marginally, but still lies in the negative zone at -1.21 per cent, as per official data released by the Ministry of Commerce and Industry on Wednesday. However, the ministry did not provide any solid reason for the marginal increase in inflation rate.

India's annual rate of inflation turned negative on June 6, for the first time after 1977. Prices of manufactured products surged marginally by 0.2 per cent, while the index of primary articles did not change, and remained at the earlier week's 258.5 levels.

The price index of fuel and power rose 3.1 per cent, as naphtha, furnace oil, petrol, high speed diesel oil and bitumen becomes dearer.

The country's annual inflation rate stood at 1.56 percent, according to the final data for the week ended May 9. The Reserve bank of India forecasts annual inflation rate around 4% by March 31, 2010.

Meanwhile, the government declined the possibility of deflation, as it expects an increase in inflation rate in the coming weeks. Deflation is a condition of zero demand in the system which is very hazardous for the economy.