"WPI inflation for the next three months is likely to be 3.1 per cent, 3.3 per cent and 3.9 per cent respectively and consumer price index inflation rate is likely to hover around 3.42 per cent," IEG said in its monthly report.
Inflation dropped to a three year low at 3.13 per cent, but inflationary pressure still persists, the think-tank said.
The decline in inflation rate might be due to various monetary measures adopted by the Reserve Bank and also due to some supply-side factors.
"But the inflationary pressures in the economy still persist, as the galloping world oil prices have not yet been absorbed fully by the domestic prices," IEG said.
On the interest rate environment, it said with international interest rate cycle moving upwards, domestic rates are expected to rise.
"We forecast a marginal rise in prime-lending rate from its existing rate of 10.5 per cent in the next three months," the think-tank said.
During the first quarter review of monetary and credit policy, RBI did not hike the bank rate due to subdued inflation rate and the assumption that it would adversely affect investment decisions.
"But given the rise in expected inflation rate following growing world oil prices and upward movement of international interest rate cycle, the monetary authorities might not hold the current interest structure for long," it added.