The Cabinet Committee on Prices chaired by Prime Minister Manmohan Singh on Thursday reviewed inflation, including rising onion prices and decided to take further measures like cut in taxes and improving supply of essential commodities.

Finance minister P Chidambaram said that the government was taking steps to bring down the prices and cut the inflation, which had touched 6.73 per cent early this month. This was mainly the result of supply contraints and increasing prices in international commodity markets, he said.

"The prices of sugar have come down and so have the prices of potatoes. Hopefully the prices of other commodities would also come down. Rising prices do worry us," he said.

He said that the agriculture minister Sharad Pawar had informed him that the price of onions would also come down soon once the new crop arrives in the market. " This depends entirely on demand and supply," he said.

As regards increasing prices of other items like cement, Chidambaram ruled out any intervention by the government saying it was more a case of demand-supply mismatch.

"When we came to power, inflation was 3.89 per cent and under the National Democratic Alliance's rule it crossed 6,7 and 8 per cent for many weeks and subsequently it was brought under control. We have cut down the prices of petrol and diesel and it should have an impact on the prices in couple of weeks to come," he said.

When asked whether the futures trading in agricultural commodities could be banned to contain inflation, Finance Minister said the Parliamentary Standing Commmittee has finalised its report on the issue.

He feigned ignorance about the income tax raids in Mumbai on some of the top builders and well-known personalities including some stock brokers.

"I was attending the cabinet meeting so I do not know about it," he said before the principal information officer Deepak Sandhu told the minister that the story on raids has already been denied by the finance ministry.

Additional Inputs: PTI