Advertisement

HindustanTimes Fri,29 Aug 2014

Elevated level of retail inflation is worrisome: RBI

PTI   New Delhi, September 20, 2013
First Published: 13:30 IST(20/9/2013) | Last Updated: 13:32 IST(20/9/2013)

The Reserve Bank of India today on Friday said the elevated level of retail inflation is worrisome and leaves no room for complacency, while wholesale price inflation will be higher than initially anticipated for the rest of the year.

Advertisement

"The current assessment is that in the absence of an appropriate policy response, WPI inflation will be higher than initially projected over the rest of the year," RBI Governor Raghuram Rajan said in his maiden mid-quarter monetary policy review.

Retail inflation was at 9.52% last month. Inflation as measured by the wholesale price index was at a six-month high of 6.1% in August, compared with the RBI's comfort level of 4-5%.

To contain inflation, the RBI today hiked the key repo rate, or short-term lending rate, by 25 basis points to 7.5% from 7.25% with immediate effect.

"Bringing down inflation to more tolerable levels warrants raising the repo rate by 25 basis points immediately," Rajan said. The action is intended to address inflationary pressures to provide a stable nominal anchor for the economy, he said.

"What is equally worrisome is that inflation at the retail level has been high for a number of years, entrenching inflation expectations at elevated levels and eroding consumer and business confidence," Rajan said.

He said better prospects of a robust kharif harvest will lead to some moderation in retail inflation, but there is no room for complacency.


Advertisement
more from Business

Former Infosys executives Bala, Pai plan $100mn global tech fund

Former Infosys board members and chief financial officers TV Mohandas Pai and V Balakrishnan are planning a $100-million (Rs 600-crore) offshore venture fund to invest in technology startups worldwide.
markets
Advertisement
Most Popular
Advertisement
Advertisement
Copyright © 2014 HT Media Limited. All Rights Reserved