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Inflation To Moderate To 6% By March 2012: FM

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With food inflation declining well below one per cent, to the lowest level since April 2006, Finance Minister Pranab Mukherjee today said the overall inflation would drop to 6 per cent by March end.

"If this trend continues then you will have (fiscal) year-end (headline) inflation around 6 per cent... But it can not be lower than 6 per cent because inflationary pressure was higher in weeks before," Mukherjee told reporters here.

His comments followed the latest data from the government that showed food inflation at 0.42 per cent as on December 17, the lowest in almost six years.

"If you confirm for longer period, the fall is sharp," Mukherjee said, while pointing to the data on rise in prices of food items.

Food inflation numbers have moderated every week since early November when it stood at double-digit.

The Finance Minister's projection of 6 per cent inflation by year-end is well below the 7 per cent forecast made by the Reserve Bank.

Headline inflation, which also factors in manufactured items, besides food and fuel, has been above 9 per cent mark since December last year. It stood at 9.11 per cent in December and RBI has projected it to fall to 7 per cent by March 2012.

RBI has hiked interest rates 13 times since March, 2010, to tame demand and curb inflation. At its Mid Quarter Policy Review earlier this month, RBI stopped further hikes and hinted that the rate may be cut in case inflation moderates.