Monetary tightening steps have had an impact on inflation: FM

Finance Minister P Chidambaram today attributed the fall in inflation to tight monetary measures taken by the Reserve Bank.

Finance Minister P Chidambaram on Friday attributed the fall in inflation to tight monetary measures taken by the Reserve Bank, but said it is too early to reach any conclusion on the price situation.

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"It (inflation) is as we have anticipated. Monetary tightening measures have had an impact," he told reporters on the sidelines of Navratna investiture ceremony.

Inflation fell to 4.28 per cent for the week ended June 22, compared to 4.80 per cent in the previous week.

However, the Finance Minister said the inflation situation has to be watched over the next 4-5 months to reach any conclusion on price levels.

He said, balance has to be struck between inflation and growth.

"I have always said we must strike a balance between inflation and growth and I maintain that," Chidambaram said.

Inflation came down to 13-month low at 4.28 per cent, against 4.80 per cent in the previous week. This is the third week in a row when inflation remained below five per cent mark.

The central bank in its annual monetary policy released on April 24 had said it will contain inflation to close to five per cent in 2007-08 and moderate it to a much tolerable level of 4-4.5 per cent in the medium term.

Prices of some food articles may come down in future as monsoon for the current year is projected to be normal, analysts said.