Thursday, August 25 2005 15:17 Hrs (IST) - World Time -

New Delhi: Inflation will not rise much from the present level of 3.35 per cent even if the domestic fuel prices are hiked in due course of time, the Finance Ministry said yesterday (Aug 24, 2005).

Though the concerns arising out of volatile global crude prices continues, Chief Economic Advisor Ashok Lahiri said, "The inflation was coming down week after week since June 25. So far, so good."

Inflation had come down mainly due to adequate supply of essential items and RBI's prudent management of money supply.

Asked whether hike in domestic fuel prices would push up prices, he said: "If you look at the weight age of petroleum products in Wholesale Price Index, it's less than 3 per cent".

"So you can work out the impact of a domestic price hike on inflation," he said, indicating that prices would not go up substantially even if petrol and diesel prices were raised.

The statement assumes importance in the light of an imminent hike in petrol and diesel prices following the increase in under-recoveries and losses of oil PSUs.

Though global crude prices have crossed 65 dollar a barrel, the Government was holding back another round of fuel price hike in the country.

However, three key functionaries in the Government Finance Minister P Chidambaram, Petroleum Minister Mani Shankar Aiyer and Planning Commission Deputy Chairman Montek Singh Ahluwalia had recently stated the need for hiking domestic fuel prices.