On the supply side, the new wheat crop should be able to quell the food inflation. There is still great uncertainty about oil prices. If they start receding from the peak levels this will have a favourable effect on the general price level and help in moderating inflationary expectations in the coming months. The other challenge is the management of balance of payments situation.
As imports of machinery and equipment along with the higher oil bill have pushed the level of imports, trade deficit has widened.