Indian wholesale price inflation contracted for a seventh consecutive month in May with an annual decline of 2.36% reported.
While still in negative territory, the figure was smaller than the 2.65% contraction recorded in April and expectations for an improvement to 2.5%.
It was also the first time since May 2014 that the annual rate increased from a month earlier.
Fuel prices fell by 10.51% from a year earlier, up from 13.03% in April, which overshadowed a slowdown in food price inflation which slipped to 3.8% from 5.73% reported previously.
The above-forecast reading reduces the likelihood of further policy easing from the Reserve Bank of India. Earlier this month the bank reduced interest rates, something they described as a “front-loaded” move amid uncertainty over the outlook for inflation.