"The Cabinet Committee on Prices reviewed the prices and decided the government will take all steps - fiscal, monetary and supply management- to moderate inflation," Finance Minister P Chidambaram told reporters after the meeting.

Meanwhile, the Prime Minister announced setting up of a special monitoring cell in the Cabinet Secretariat which will keep a daily watch on the price situation of essential commodities and provide support to states.

"You may like to put in place an appropriate mechanism for regular intensive monitoring of the prices of commodities in order to promptly detect any short-term fluctuations and take necessary corrective action," Singh said in a letter to the chief ministers.

Rising prices of food items have pushed up inflation to 6.73 per cent for the week ended February 3, much higher than RBI's threshold limit of 5.5 per cent for this fiscal.

Singh said states can play a major role in checking prices by curbing malpractices, profiteering and hoarding.

Earlier, Agriculture Minister Sharad Pawar briefed the CCP about the scheduled arrival of new crop of essential commodities including fruits, vegetables, wheat and pulses.

Asked whether futures trading in agricultural commodities could be banned to contain inflation, Chidambaram said the Parliamentary Standing Committee has finalised its report on the issue. "The final view will be taken by Ministry of Agriculture, which will then bring it to Cabinet or CCEA," he said.