Mukherjee expresses confidence to absorb fuel price hike impacts

Union Finance Minister Pranab Mukherjee on Monday said the hike in fuel prices would have some inflationary impact in the short-term.

However, Mukherjee expressed confidence that price pressures will moderate from the middle of July.

Interacting with media on the sidelines of bankers summit here, Mukherjee said: "There will be some impact on inflation in the short-term, but it will be absorbed in the course of time.”

Mukherjee said the decision to hike the fuel prices will not have any impact on fiscal deficit as the additional money goes to oil marketing companies instead of Consolidated Fund of India.

Commnenting on whether increase in inflation would prompt the Reserve Bank to raise policy rates, Mukherjee said the decision on policy rates is the prerogative of the RBI which will consider all factors during policy review.

Mukherjee said his adviser has told him that there will be 0.9 per cent direct impact on inflation and there will be cascading effect.