Driven by higher prices of food items like pulses, cereals, milk, and fruit and vegetables, inflation rose marginally to minus 1.14 percent against (-)1.61 percent in the previous week.

The wholesale price index stood at 11.80 percent during the corresponding week a year ago.

The index was 234.2 points for the week ended June 13 from 236.9 in the same week a year ago.

India possibly is the only major economy moving into a deflationary zone though the European region is near zero level due to recessionary pressures.

However, Reserve Bank Governor D Subbarao last week had said there is no threat of deflation as food and crude oil prices are still firm and India does not suffer from demand constraints.

This is the second week in a row when inflation has remained in negative territory.

Low inflation is prompting banks to cut interest rates. On Wednesday the country's largest lender, State Bank of India, reduced the benchmark lending rate by half a percentage point, leading to cheaper home, car and corporate loans.

During the week, tea became expensive by 2 percent and arhar by 1 percent.

At the same time, fuel items like aviation turbine fuel surged by a whopping 12 percent, light diesel oil by 10 percent and furnace oil by 3 percent.

Even though inflation is in negative territory, the RBI is likely to keep the interest rates unchanged.

The RBI is likely to maintain the status quo in its upcoming review of monetary policy next month, said HDFC Bank Economist Jyotinder Kaur.

The Reserve Bank Governor had said that the central bank will be looking at reversing the expansionary policy at an appropriate time.

"I do not want to say we are going to do it right now or in the near future but certainly that is part of the agenda," he had said.

According to Crisil Principal Economist D K Joshi, "inflation is likely to remain in negative territory for the next two months and thereafter I expect it to rise sharply to reach 5 percent by the end of this fiscal."

Year-on-year, the prices of cereals went up more than 13.7 percent, pulses 17.06 percent, and fruit and vegetables 10.22 percent. At the same time, the prices of milk have gone up nearly 4.8 percent over last year, while spices were more expensive, by about 8.08 percent.

During the week, a manufactured product like coconut oil was expensive by 1 percent, cotton yarn by 2 percent, cycle tubes by 8 percent and capsules other than vitamins and antibiotics by a whopping 58 percent.

However, prices of lead ingots declined by 8 percent, steel ingots and zinc ingots by 6 percent each and alloy stainless steel by 2 percent.

At the same time, motorcycles and other automobile spare parts were dearer by 4 percent.

Inflation for the week ended March 28 was revised upwards to 0.84 percent from 0.26 percent, as estimated provisionally.