Prices of commodities, food grains and crude oil are a concern and the country must do its best to keep inflation down, Finance Minister Palaniappan Chidambaram said in an interview published on Thursday.
Chidambaram told Bloomberg news wire that inflation was low because India had kept tight control on money supply and allowed the rupee to rise.
"I am still concerned about commodity prices, prices of food grains, edible oils and most importantly, I am very concerned about crude oil prices," he said in the interview on the Bloomberg website.
"We have to do our best to keep inflation down in a world where fuel prices are flaring up, commodity prices are increasing and demand remains high in China and India," he said.
Indian media have speculated the government will raise retail prices of petrol and diesel because global oil prices are trading close to record highs.
"Rising crude oil does not necessarily mean higher local fuel prices," Chidambaram said. "It means our subsidy bill can go up."