NEW DELHI, Feb 15: India’s inflation on Thursday jumped to a two-year high of 6.73 per cent, prompting the government to slash diesel and petrol prices and raise expectations of more rate hikes to stabilise prices.

Rising prices sent ripples of fear through India’s Communist-backed federal administration and prompted Prime Minister Manmohan Singh to issue a statement to try and calm jitters from the domestic market.

“As far as inflation is concerned, we are adopting a multi-pronged strategy that will yield results soon,” Singh told reporters on the sidelines of a meeting with Italian Prime Minister Romano Prodi.

“You must have noticed that prices of diesel and petrol have come down. I can confirm that within a few weeks you will see the results,” the prime minister added.—AFP