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Inflation to come down in two months: Montek

April 09, 2010 17:17 IST

InflationAmid expectations of a double- digit inflation in March, the Planning Commission on Friday exuded confidence that inflationary pressures will come down over a couple of months.

"I believe food inflation will come down...I believe inflationary pressure will come down over a couple of months," Planning Commission deputy chairman Montek Singh Ahluwalia told reporters in New Delhi.

He, however, evaded direct reply to a query on whether RBI would further tighten its monetary policy to tackle inflation, saying, "it is for the RBI to take further monetary action."

The Reserve Bank of India has already raised its key short-term rates by 25 basis points to cool inflation and many experts believe that it will make money dearer to tame inflation in its April 20 annual monetary policy announcement.

It can be noted that food inflation rose to 17.70 per cent towards the close of March. Ahluwalia said, "I think no single instrument in a very short-term can impact inflation," as it involves many different things and its movement should be watched over a period of time.

Earlier in the day, Moody's economy.com also doubted the the effectiveness of monetary tools on controlling food inflation.

Tighter monetary policy will have limited impact on inflation in the current environment, which is affected largely by supply side factors that are beyond RBI's control, said Moody's Economy.com, a division of Moody's Analytics Inc. Economists believe inflation may enter double-digits in March.

In fact, finance minister Pranab Mukherjee had said that he would not be surprised if inflation enters double digits.

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