Inflation to fall in 2 months: Montek

The Planning Commission on said food prices will come down in the next two months easing the overall inflation, which is currently at over 8.5 per cent.

"The trend is that food price will come down in the next two months. I am sure that the trend down on food prices will bring down the overall inflation in the next two months," Planning Commission Deputy Chairman Montek Singh Ahluwalia.

The wholesale price inflation (WPI) rose to 8.56 per cent in January, the highest in over 13 months, shooting past the RBI's forecast of 8.5 per cent for this fiscal end. The WPI hike was mainly because of a surge in prices of food items such as sugar, potatoes and pulses.

Overall inflation in December was 7.31 per cent. In January, sugar prices rose by 58.96 per cent year-on-year while potatoes turned costlier by 53.39 per cent and pulses by 45.64 per cent. About the government's borrowings next fiscal, Ahluwalia said, "If fiscal deficit goes down the govt borrows less that year...means more money is available for private sector."

Finance Minister Pranab Mukherjee has projected a fiscal deficit of 5.5 per cent (of GDP) in his budget for 2010-11 against the estimates of 6.7 per cent for this financial year.