The rate of inflation is likely to go up by around 0.4 per cent on account of fuel price hikes indicated in the Budget.
However, the reduced excise and Customs duties on many items announced in the Budget will offset the hike, so that the net change in inflation levels will be marginal.
"The Budget should push inflation levels by a maximum of half a percentage point," said B B Bhattacharya of the Institute of Economic Growth.
"If there is no war, the average wholesale price index-based inflation level should be around 5.5 per cent in 2003-04," he said.
"In case a war breaks out in West Asia, the impact on inflation will depend on the length of the war and disruption in oil supplies," he added.
In the category of fuels, the additional cess of 50 paise per litre on petrol and diesel, in addition to the rise in international oil prices, has pushed up prices of these two items.
The combined effect of the latest round of price increases, effective from March 1, will be to raise inflation levels by 0.17 per cent.
Additionally, the government has not cut duties or increased subsidies on liquefied petroleum gas and kerosene in the Budget.
Oil marketing companies are, therefore, pushing for an increase in prices of LPG by Rs 20-30 per cylinder and of kerosene by at least Re 1 a litre.
Assuming a minimal increase of Rs 20 per LPG cylinder, the wholesale price index-based inflation can go up by 0.15 per cent, while a Re 1 increase in kerosene prices will push inflation by 0.08 per cent.
The hike in inflation on this account would, however, be offset by the reduced excise on many commodities, said Subir Gokarn, chief economist, Crisil.
The real threat to inflation would be international oil prices, he added.