NEW DELHI (AFP) -- Indian inflation rose a sixth of a percentage point to nudge the central bank's ceiling of 5.50 percent in the 12 months to November 18.

The inflation increase came on top of figures Thursday showing that the economy grew by a better-than-expected 9.2 percent in the second quarter to September, driven by strong manufacturing output.

The wholesale price index, the most closely watched price barometer in Asia's fourth-largest economy, showed inflation jumped to 5.45 per cent for the week ended November 18, up from the previous week's level of 5.29 percent.

The price rise was driven largely by increases in the cost of manufactured goods and staples such as pulses.

India's finance minister P. Chidambaram said inflation was a "supply side" problem and he was confident it would come down with the arrival of a new crop of wheat early next year and other food stocks.

The increase in the price of food staples is of key concern to the ruling Congress party, which owed its surprise 2004 general election victory to support from India's poor masses.

India's inflation rate stood at 4.27 per cent for the corresponding week last year.

Economists said inflation appeared set to breach the central bank's target range of 5.0 to 5.5 percent.

"Headline wholesale price index inflation is poised to exceed the official wholesale price index forecast range," said Rajeev Malik, an economist at JP Morgan in Singapore.

"The demand-driven inflation pressures and the over-extended credit cycle still warrant sterner policy response," Malik said.

He forecast another central bank rate hike in January if not earlier, despite a government cut in fuel costs of up to four percent earlier this week that reflected falling global oil prices.

The central bank raised its main lending rate, the repo rate, by 25 basis points to 7.25 percent in October while keeping its main borrowing rate stable at a four-year high of 6.0 percent. The finance minister said with the pace of economic growth, some kind of inflation was "inevitable." However, he said the government aimed to wrestle down inflation to around four percent "in due course."

The Indian rupee was steady against the dollar at 44.7, but weakened against the euro to 58.9 from 58 on Wednesday.