The rise came as analysts predicted a further increase in inflation in coming weeks following the Congress-led coalition government's decision late Thursday to hike oil and cooking gas prices.

Inflation for the week ended October 23 jumped to 7.38 percent from the previous week's level of 7.10 percent, largely driven by higher food and manufactured goods prices.

"Given the trend in oil prices it's only natural there will be upward pressure (on inflation)," said T.K. Bhaumick, senior economist at the Confederation of Indian Industry.

The hike in oil and cooking gas prices, which went into effect Thursday at midnight, will have a cascading effect on the cost of all goods, pushing up overall inflation, analysts said.

Bhaumick said inflation for the fiscal year ending March 2005 is likely to average around 8.0 percent. Inflation reached a three-and-one half year peak of 8.32 percent in August.

The price of a cooking gas cylinder went up immediately by 7.0 percent to 281 rupees (six dollars) and another five rupees will be added each month until the gap with the international price is erased.

Petrol prices were hiked 5.0 percent to bring them into line with the imported price, while diesel was increased 7.0 percent.

The government had delayed raising fuel prices for fear of aggravating inflation and denting economic growth in farm-dependent India, where agricultural output has been hit by patchy monsoon rains.

However, it finally raised fuel costs to bring them more into line with world prices and stem falling revenues at state-run refiners which racked up revenue losses of 100 billion rupees (2.2 billion dollars) in the first half of the financial year.