Inflation to decline to 6.5% by March if oil prices soften:PM

"I have reasons to believe if oil price soften and commodity prices remain where they are, we should be able to bring down inflation to 6.5 per cent by end of March," he said in an interaction with a group of editors here.

Inflation now is hovering around 9 per cent, much above the Reserve Bank's comfort level of 5-6 per cent. With the recent hike in prices of petroleum products, the rate of price rise could enter the double-digit zone.

Pointing out that the government did not have a magic wand to bring down prices of international commodities, Singh said, "Inflation is a global problem. China's rate of inflation has gone up sharply."

The oil prices have started going up and had crossed USD 100 to a barrel in the backdrop of political turmoil in the Middle-East.

"We did not anticipate that Middle-East will be in turmoil, that there will be increase in fuel prices and commodities. We have no control on this and there is no magic wand to bring down prices of international commodities," Singh said.

Talking of the food security system, he said agriculture is in good shape and "we have today all-time high stock of foodgrains... we have at long last means to reach out to large number of people".

The Prime Minister said he had discussed the inflation scenario with his key economic adviser C Rangarajan on ways to contain price rise.

Rangarajan, who is the chairman of the Prime Minister's Economic Advisory Council, had earlier said that the decision to increase prices of diesel, cooking gas and kerosene could push the inflation into the double-digit zone.

In view of the spiralling prices of crude oil in the international market, the Indian government had increased the price of diesel by Rs 3 per litre, LPG by Rs 50 per cylinder and kerosene by Rs 2 per litre.

Headline inflation, as measured by the wholesale price index (WPI), was 9.06 per cent in May, 8.7 per cent in April and 9.7 per cent in March. Inflation has remained stubbornly high despite Reserve Bank raising its key policy rates 10 times since March 2010.

The Reserve Bank is slated to come out with its quarterly monetary policy on July 26 in which it could announce more measures to contain price rise.