"You can get a much lower rate (below 8 per cent) of inflation, if there is confluence of favourable factors such as moderation in oil prices and so on," Rangarajan told PTI.

Referring to the impact of good monsoon on prices, he said despite shortfall in rains in July, monsoon is expected to be good, and "on the whole we may have a good year".

"As things stand, perhaps to look at a rate of inflation of 8-9 per cent will be a difficult thing, but probably, we will do it by March 2009," Rangarajan said.

He said the international oil prices are expected to remain at the current level. However, if the trend of declining oil prices continues it would help to bring down the prices.

The international oil prices has come down to $123 a barrel after crossing $147 a barrel on July 11. He said the current price rise was caused by many domestic and international factors like oil, food and commodity prices.

The inflation which stood at 7.82 per cent in May this year, shot up above 11 per cent in June after hike in petroleum prices. It touched 11.98 per cent for the week ended July 19.

Inflation that we are seeing today is the result of external factors: oil, food and other commodity prices have impacted Indian economy. But domestically also there are factors which have also contributed, he said.

Pointing out that some sectors of Indian economy showed signs of overheating last year, EAC chairman said increase in money supply has also contributed to rise in prices.

Inflation: The silent killer