Inflation to rise to 2-4% by March '10

The government on Monday said that inflation would not remain in the negative territory for long and would rise to about 2 to 4 per cent by the end of the current fiscal.

"As far as inflation is concerned, the Wholesale Price Index inflation will go down for a while and (then) it will come up. At the end of March this year, this could be in the range of 2 to 4 per cent", chief economic advisor Arvind Virmani told newspersons at the customary post-Budget briefing.

The inflation which hit a high of 13 per cent in August following spike in prices of petroleum products in the international market, has been on the decline since the outbreak of the global financial crisis in mid-September last year.

The inflation rate, after a gap of almost three decades, turned negative for the week ended June 6 and was likely to remain in that territory for some more time.

Besides decline in prices of manufactured goods, the base effect is also responsible for negative growth in the WPI index.

The base effect is likely to continue for some more time as the inflation last year peaked in August. However, the impact of the recent increase in price of petrol and diesel will have a bearing on the inflation rate in coming weeks.

The government increased the per liter price of petrol and diesel by Rs 4 and Rs 2 respectively on July 1.