Nov. 23 (Bloomberg) -- India's inflation held near a five- year low as the government subsidized fuel to protect consumers from record crude oil prices ahead of elections.

Wholesale prices rose 3.01 percent in the week ended Nov. 10 from a year earlier, slower than a 3.11 percent gain in the previous week, the Ministry of Commerce and Industry said today in New Delhi. Analysts had forecast inflation at 3.20 percent.

Prime Minister Manmohan Singh this week appointed a panel of ministers to examine fuel costs, which haven't been raised this year amid a near 60 increase in crude oil prices. The government doesn't want to allow Indian refiners to raise prices on concern it will accelerate inflation before state and national elections.

``The comfort that one should get from low inflation is not there,'' said Dharmakirti Joshi, principal economist at Mumbai- based Crisil Ltd., the local unit of Standard & Poor's Ltd. ``Non-revision of oil prices has suppressed inflation by at least 100 basis points.''

Inflation in the second week of November slowed as the index of fuels remained unchanged and the index for food articles declined. Wholesale prices rose 2.97 percent in the week ended Oct. 27 from a year earlier, the lowest in more than five years.

`Out of Hand'

``Oil prices have risen to new highs and they are expected to further rise,'' Finance Minister Palaniappan Chidambaram told a business conference in New Delhi today. ``It is important to factor in these changes and adjust policies so that inflation doesn't go out of hand.''

Crude oil for January delivery was trading at $97.50 a barrel in after-hours trading on the New York Mercantile Exchange at 1:21 p.m. in New Delhi. At current oil prices, India's subsidy bill will be 686.4 billion rupees ($17.4 billion) this year, the oil ministry estimates.

Singh's government hasn't raised gasoline and diesel rates this year to help keep inflation down and protect the poor who make up half the country's 1.1 billion people. Cooking gas prices haven't been raised since November 2004 and kerosene since April 2002.

India's Gujarat and Himachal Pradesh provinces are scheduled to hold elections by next month. Analysts expect national polls may take place ahead of the May 2009 schedule because of differences on economic and foreign policy between the government and its main communist allies.

Price Rises

India may have to raise fuel prices if crude oil costs remain at current record levels, said Montek Singh Ahluwalia, a key economic policy adviser to Prime Minister Manmohan Singh this week.

The Reserve Bank of India, while maintaining its policy rates at a 5 1/2-year high last month, described the current inflation rate as ``suppressed'' because it does not reflect the rise in oil price to records.

India's central bank Oct. 30 unexpectedly ordered lenders to set aside more reserves for the fourth time this year to contain inflation. Reddy reiterated the bank aims to contain inflation below 5 percent by March 31.

``The Reserve Bank may again raise the cash reserve ratio if foreign inflows continues,'' Joshi said.

India today revised the inflation rate for the week ended Sept. 15 to 3.51 percent from 3.23 percent. The government revises the figure after a delay of two months on additional price data.

                       Week Ended   Week Ended   Percentage
                        Nov. 10       Nov. 3       Change

Primary articles         223.3         224.2        -0.4
Fuel, power              325.7         325.7        unchanged
Manufactured products    188.1         188.0         0.1
Food articles            223.1         223.7        -0.3
Vegetables               219.9         224.2        -1.9
Pulses                   240.9         243.4        -1.0
Food products            191.4         191.2         0.1
Edible oils              175.2         174.7         0.3
Cement                   219.7         219.5         0.1
Total                    215.4         215.6        -0.1

To contact the reporter on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net.

Last Updated: November 23, 2007 03:20 EST