Reserve Bank of India said on Tuesday the outlook for inflation in 2003-04 is expected to remain benign in the country.
"International crude prices have started easing and upside risks for dometic inflation are waning. A downward revision in domestic petroleum product prices with effect from April 16 is expected to enable a further decline in inflation," RBI said in its macroeconomic and monetary developments in 2002-03 statement in Mumbai.
Information on the spread and intensity of rainfall needs to be juxtaposed with initial forecasts of the monsoon in the approaching season to obtain reliable guage of the impact on prices on primary articles, it said.
The recent firming up of prices of manufactures would depend on sustained acceleration in industrial activity to influce the near-term inflation outlook in India, it added.
The report said international crude prices declined from 1992 onwards, interrupted by periods of hardening in 1995-97 and 1999-2000. Since early August 2002, spot oil prices rose markedly owing to concerns about the geo-political situation in the Middle-East (West Asia).
"In the aftermath of the war in Iraq, the outlook for international oil prices is soft. These global developments are expected to have a bearing on domestic inflation situation in the year ahead," it added.