Chidambaram expects inflation to moderate

NEW DELHI (Reuters) - India's annual inflation rate, which neared 8 percent in early May, is expected to moderate once the impact of lower steel and cement prices is felt, Finance Minister Palaniappan Chidambaram said on Friday.

The wholesale price inflation rate, India's most widely watched measure, rose 7.83 percent in the 12 months to May 3, its highest since Nov. 2004 and above a median forecast of 7.50 percent in a Reuters poll.

"Our expectation is that inflation will moderate. We are waiting for steel and cement price cuts to come into force. You have to be patient," the finance minister told reporters.

"We reserve the right to take more administrative measures," he said without elaborating.

Chidambaram also said unless global crude oil prices decline, India would continue to witness "pretty high inflation" in the fuel group.

(Reporting by Rajkumar Ray)