The government today said cut in petroleum product prices is bound to pull down inflation further, although the rate of rising prices has shown an upward in the last two weeks.
"The cut in petroleum prices will bring down inflation by more than one percentage point," Minister of State for Finance P K Bansal told reporters on the sidelines of an insurance summit here.
Inflation today rose to 5.64 per cent for the week ended January 17, from 5.60 per cent in the previous week. It had declined for the 10th consecutive week to 5.24 per cent for the week ended January 3.
Having touched a peak of 12.91 per cent in August last year, the WPI index has continued its downward march and dipped below the double-digit mark in November.
"Inflation has marginally increased this time. But it will continue its downward trend once the impact of price cuts in petroleum takes place. It will come down to 3 per cent by March-end as the RBI said," the junior finance minister said.
On credit flow, Bansal said transmission of credit was being monitored and it was on the rise.
"The credit flow has improved to 24 per cent," he said, referring to the third quarter review 2008-09 released by RBI on Monday. The increase in credit in the fiscal year, so far, from 21.4 per cent last year, was mainly due to public sector banks.
