Inflation rate fell more than expected to a 14-month low in mid-June, but analysts said on Friday that firm manufactured product prices and data revisions meant the Reserve Bank of India had no room to relax policy now.

Separate data showed the current account balance swung into surplus in the March quarter from a deficit at the end of 2006, helped by Indians overseas sending money home.

The widely tracked wholesale price index rose 4.03 percent in the 12 months to June 16, slowing from an annual rise of 4.28 percent a week earlier and well below a two-year high of 6.69 percent in late January, data showed.

It was lower than a Reuters poll estimate of 4.13 percent.

But analysts said that firm manufactured product prices and data revisions meant the RBI had no room to relax policy now.

"The manufacturing inflation, or core inflation, has still not come off," said Harish Menon, economist at ING Vysya Bank.

"The RBI should pause rather than react to these positive numbers. If the market is looking to go into an easy monetary stance based on these numbers, they would be disappointed."

The annual inflation rate for April 21 was revised up to 6.07 percent from 5.77 percent, with the index for that week revised up to 211.5 points - just 2 points below the preliminary index level as at June 16.

Speaking after the data, RBI governor Yaga Venugopal Reddy reiterated the central bank's aim was to contain inflation to 5 percent in the fiscal year that began in April, and lower it to 4.0 to 4.5 percent in the medium term.

The RBI has raised interest rates five times in the past year, the last time at the end of March, but could now hold its fire when it next reviews policy on July 31 with inflation below its comfort zone of 5 percent.

Finance Minister Palaniappan Chidambaram has said that policy tightening and currency strength had helped moderate inflation, and more rate rises may not be needed if the trend continued.

In its latest forecast, the weather office said monsoon rains in July -- the most crucial month for farm output-- were expected to be 95 percent of the long period average. Analysts say good monsoon rains would result in better crops which in turn could help ease supply pressures and inflation.

The Indian economy, Asia's third-largest, grew 9.4 percent in the fiscal year that ended in March, its highest rate in 18 years and second only to China among major economies.

CURRENT ACCOUNT SURPLUS

The government said its fiscal deficit for April and May, the first two months of the 2007/08 fiscal year, was 621.35 billion rupees ($15.3 billion), or 41.2 percent of the full-year target of 1.51 trillion rupees.

Separate data from the RBI showed the current account swung to surplus of $2.56 billion in the March quarter from a revised deficit of $2.78 billion in the December quarter.

For the 2006/07 fiscal year, India posted a current account deficit of $9.61 billion. While that was wider in dollar terms from a $9.19 billion deficit in 2005/06, the deficit held steady at 1.1 percent as a percentage of gross domestic product.

The balance of payments surplus rose to $20.45 billion in the March quarter from a revised surplus of $7.51 billion in the December quarter. External debt rose by $12.3 billion in the quarter to $155.0 billion at the end of March