Inflation to come down after new crops arrive: FM

Finance Minister Pranab Mukherjee today said he does not have a magic lamp to bring down inflation automatically and exuded confidence that it will decline from the present level of over 10 per cent after new crops arrive in the market.

"It (inflation) is a matter of concern, no doubt.  But... there is no magic lamp through which you can bring it down or raise it... I do hope it would stabilise after good crop prospects, which is likely to happen during this kharif season," Mukherjee told reporters after meeting with heads of regional rural banks here.

He said new crops would have a moderating impact on prices.

The Finance Minister said even though food inflation has come down to just 12 per cent from over 20 per cent in December, 2009, fuel and "certain other items" are adding to inflationary pressures.

Mukherjee, however, refused to say anything on RBI's monetary action, scheduled to be taken on Tuesday.

To a query whether RBI's actions would rein in inflation, central bank Deputy Governor K C Chakrabarty said," Whatever steps we take, hope is always there that they will work."

RBI is scheduled to announce the first quarterly review of monetary policy amid expectations that it will raise short-term borrowing and lending rates to cool down high inflation.

Overall, inflation has been at over 10 per cent for the last five consecutive months till June.

The government has last month raised petrol prices by Rs 3.5 a litre while deregulating it, diesel by Rs 2, LPG by Rs 35 a cylinder and kerosene by Rs 3 a litre.

Yesterday, Prime Minister Manmohan Singh had expressed confidence that overall inflation will come down to 6 per cent by December on the back of good crops.