Planning Commission on Monday welcomed Reserve Bank of India's decision to hike cash reserve ratio by 0.5 per cent to 5 per cent saying it is the right step to suck out excess liquidity, one of the reasons for inflation touching 4-month high of 8.33 per cent.

"Finance Minister P Chidambaram has already clarified that inflation is an issue that government is always concerned (about). It (hike in CRR) is a right step. I am glad the step was taken and I think it will help", Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters on the sidelines of a telecom roundtable meet.

Chidambaram had on Sunday said the RBI step would ease inflationary pressure. The CRR hike would suck out Rs 8,000 crore (Rs 80 billion) excess liquidity.

Tracing the origin of the current inflationary tendencies, Chidambaram had attributed the surge in prices to two factors -- external, on which the government had no control, and the inherited problem of liquidity estimated at Rs 60,000 crore (Rs 600 billion) of excess money supply in the economy.