Patchy rains and high commodity prices are likely to keep the inflation rate at high levels over the next few months, the government said on Monday.
“Given the prevailing situation with untimely and inadequate rain, we may expect food prices to remain higher in the current financial year. WPI inflation is expected to remain sticky at 7.5-8.0% level before moderating in early 2013,” the finance ministry said in its background note to the economic editors conference.
Finance minister P Chidambaram said the burden of containing inflation has fallen largely on the Reserve Bank of India. “A tight money policy has dampened investment as well as growth, particularly in the industrial sector,” he said.
Inflation, he said, is an issue of “persistent concern” over the past few years. “It is the government’s firm belief that fiscal policy and monetary policy should work in tandem so that the common objectives of containing inflation and stimulating growth are achieved,” he said.