Govt sees inflation going down to 3% by March end

With inflation declining continuously for the 10th week in a row to 5.24 per cent in January, the government today said it might go further down to 3 per cent by the end of March, even while discounting any threat of deflation.

"We are expecting inflation in the order of 3-4 per cent by the end of March. I don't feel any threat of deflation," Economic Affairs Secretary Ashok Chawla told reporters on the sidelines of the Petrotech 2009 conference here.

Having touched a peak of 12.91 per cent in August last year, inflation has continued its downward march and dipped below the double-digit mark in November.

Inflation was 5.91 per cent a week ago.

"We are seeing robust and healthy decline in inflation numbers... Over the last many weekends. The trend is very very clear... It will come down to still more manageable number," Chawla said, commenting on the inflation figures released by the government in the morning.

On the possibility of any further rate cut by the RBI, he said, "(The) inflation number is one of the parameters which go into determining the interest rate that banks would charge. But the direction and signals are very clear and I think these are being picked by the banks."

Inflation for the latest reporting week does not capture the impact of the truckers' strike, which began on January 5.

However, in addition to the impact of declining oil and commodity prices in the global market, the steps taken by the government like the four per cent cut in excise duty and lowering of petroleum product prices (on December 5) will continue to have benign effects on price rise.