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On Board Air India One, Nov 12 (IANS) Prime Minister Manmohan Singh Saturday indicated that the fuel prices may have to be hiked again if international oil prices escalate further. He also termed the double digit inflation rate ’worrisome’.

When asked if there will be a review of a recent fuel hike which has been opposed by the UPA’s ally Trinamool Congress chief Mamata Banerjee, he said the government currently provides Rs.1.32 lakh crores as subsidy to mitigate the high international fuel prices and this burden is ’unsustainable.’

The prime minister, while speaking to reporters on board his special flight on his way home from the SAARC summit in the Maldives, said if the international oil prices rise further than any more, subsidies can only aggravate inflation.

On Nov 3, the three state-run oil marketing companies (OMCs) had raised petrol prices by Rs.1.80 per litre. The move came just over a month and a half since the last hike.

The hike was to fight depreciation of the rupee and high global crude prices, the oil firms said.

The latest hike of Rs.1.80 per litre -- the 11th time since June 2010 -- comes over and above a steep upward revision of Rs.3.14 a litre on Sep 15, 2011.

Petrol is deregulated, giving oil marketing firms the freedom to change retail prices, they still require the government’s approval to effect any changes in the prices of diesel, kerosene and cooking gas.

On inflation, the prime minister said this was ’a worrisome problem. And I do not deny it particularly with regard to food prices’.

The country’s food inflation continued to be in double digits during the week ended Oct 29, although it dipped marginally to 11.81 percent, recent data showed.

Food inflation had risen to the highest level in nine months last week at 12.21 percent. It’s been a month since food inflation breached the double digit levels.

Prices of pulses, vegetables and milk and poultry rose.

Overall inflation too has remained stubbornly high, near double digits, since January 2010.

The prime minister further said that one reason for high inflation was the rise in fuel prices.

’Foodgrain prices are stable. But the prices of vegetables and that of tertiary goods are going up . The demand is growing on a much faster rate on the supply curve,’ the prime minister said.

’One reason why inflation has become a problem is due to the prices of fuel products,’ Manmohan Singh replied.

He also said that with the gross domestic growth of eight percent, the average per capita income would grow by 6.5 percent this fiscal.

’The economy is growing at the rate of 7.5 percent to 8 percent per annum. With the economy growth at eight percent the per capita income will grow at 6.5 percent,’ the prime minister said.