Prime Minister’s economic advisory panel on Monday said inflation would moderate to near comfortable level of 5.5 per cent by March-end from about 7.48 per cent currently, notwithstanding the spurt in food inflation noticed recently.

“I think by March (2011), we can expect (WPI) inflation to come down to 5.5 per cent,” the chairman of the Prime Minister’s Economic Advisory Council (PMEAC), C Rangarajan, told reporters on the sidelines of the 93rd annual conference of Indian Economic Association in Chandigarh.

Prime Minister Manmohan Singh too while addressing a session of the Congress earlier in the month had exuded confidence that inflation rate would moderate to 5.5 per cent by end of 2010-11.

While the overall inflation came down to 7.48 per cent in November from 8.58 per cent in the previous month, the food inflation, spurred by rising prices of onion, soared to 12.13 per cent for the week ended 11th December.

The food inflation entered the double digit zone after a gap of about a month.

As the inflation figures did not capture the recent increase in petrol, which was close to Rs 3 per litre, and spurt in onion prices, which soared to Rs 80-85 per kg, the rate of price rise is likely to show a bigger increase.

Replying questions on what is the comfort level of inflation, Rangarajan said, “I think any level of inflation beyond 5 per cent is uncomfortable.”

On the possibility of Reserve Bank taking monetary steps at its next quarterly review to tame price rise, Rangarajan said, “it (rate hike) all depends upon how overall inflation behave in coming weeks … I think if there is further fall in WPI inflation then monetary policy would remain as it is now”.

“They (RBI) have not made any change in policy rate … we need to watch the behaviour of overall inflation before monetary authorities can take any decision”, he added.

The central bank, which is slated to announce the quarterly review of the monetary policy on 25th January, had raised key policy rates six times in 2010 to check inflation.

As regards economic expansion, Rangarajan hoped that Gross Domestic Product (GDP) growth rate could cross PMEAC’s earlier projection of 8.5 per cent.

“We had forecast the GDP of 8.5 per cent we will achieve 8.5 per cent … perhaps we will do better than that … I expect growth rate between 8.5 and 9 per cent,” he said.

Having impacted adversely by the global financial meltdown, economy expanded by 7.4 per cent in 2009-10, up from 6.7 per cent in the previous fiscal.

The economy expanded by 8.9 per cent during the first half of the current fiscal raising hopes that 2010-11 might end with a growth rate of about 9 per cent.

Economy was growing at over 9 per cent before it was hit by the global financial crisis.