Encouraged by a sharp dip in December inflation, finance minister Mr Pranab Mukherjee said the declining rate of price rise indicates improvement in macro economic parameters and projected March end numbers at 6 to 7%

Headline inflation, as measured by Wholesale Price Index fell to a two year low of 7.47% in December 2011, from 9.11% in the previous month.

Mr Mukherjee said that "Headline inflation should be between 6 and 7% in March end 2012 adding that he is confident that moderation in inflation would continue in the coming months.”

As per the official data, prices of food items rose at a lower rate of 0.74% in December, compared to 8.54% expansion in the previous month.

The decline in the December inflation, he said that is mainly due to significant decline in inflation for primary articles, including food inflation.

Mr Mukherjee said good industrial production numbers for November at 5.9% and a sharp decline in inflation indicates some improvement in the overall macro economic parameters in the second half of 2011-12.

Mr Mukherjee added that "This trend is likely to consolidate in the coming months with some policy correctives.”

(Sourced from ET)