Bangalore, Jul 30 (IANS): India's inflation rate, which peaked this month following the fuel price hike in June, will keep declining after July and moderate by December, Planning Commission Deputy Chairman Montek Singh Ahluwallia said Friday.

"It is true the core inflation rate had seen the full impact of the fuel price hike early this month. You will see the full effect of it (fuel price hike) now but inflation will definitely keep coming down after July," Ahluwallia told reporters on the margins of an interactive session with members of the Bangalore Chamber of Industry & Commerce (BCIC) here.

Allaying fears that the fuel price hike would lead to an increase in the inflation rate, the deputy chairman said such a description would be incorrect as the government was not running a hidden deficit.

"I don't think the fuel price hike will make any difference to inflation by December. Though I am not making a prediction, I am saying it (inflation) is going to be down by this year-end," Ahluwallia reiterated.

For the first time this year, food inflation, as measured by the wholesale price index (WPI), eased to 9.67 percent for the week ended July 17, from 12.47 percent a week earlier and 15.05 percent in the like period a year ago.

Food inflation remained above the 16 percent level for the most part of last year before falling to below 13 percent since mid-June, according to the official data released Thursday.

The fuel prices index, however, rose to 14.29 percent due to the impact of the June 25 fuel price hike. The primary articles index rose at a slower pace to 14.5 percent.

Commenting on the monetary measures of the the Reserve Bank of India (RBI) to contain inflation, Ahluwallia said the central bank had given the right signal that it was not going to let inflation go untouched.

"The signal is very clear that the central bank is worried about the inflation rate," he added.