Inflation eyeing 8 per cent mark

The wholesale price inflation rate, India's most widely watched measure, rose 7.83 percent in the 12 months to May 3, higher than previous week's 7.61 percent and above a median forecast of 7.50 percent in a Reuters poll.

The surprise jump, stemming from higher prices of industrial fuel, metal products and some food items, comes after a series of measures by the government and the central bank to calm price pressures in Asia's third-largest economy.

"I think pressures will persist in coming weeks and will prevail above 7 percent for the next three to four months," said D.K. Joshi, principal economist at domestic ratings agency Crisil in Mumbai.

"It's a Catch-22 situation as they (central bank) have to manage slowing growth and rising inflation. It's a tough task."

The 10-year bond yield rose two basis points after the data to 7.88 percent and the partially convertible rupee weakened to 42.73/74 per dollar from 42.64/65.

Analysts expect the inflation rate to remain elevated and say it could climb to 8 percent in coming weeks. In addition, previous weeks' readings have consistently been revised higher.