India's inflation rate has reached uncomfortable levels and some action from the central bank is needed to curb demand-side pressures, a top policy adviser said on Thursday.
"I don't know what the RBI (Reserve Bank of India) will do. All I can say is that the inflation rate has reached a very uncomfortable level," C. Rangarajan, chairman of the prime minister's Economic Advisory Council told reporters on the sidelines of a conference.
He said double-digit inflation has stayed high for the last three to four months and could no longer be treated as triggered purely by food inflation. The manufacturing sector, too, was showing a reasonably high degree of inflation.
"Therefore, some action in the demand side is called for. It is for the RBI to take the action either immmediately or later but I think the question of some action in terms of tightening policy has become imperative," he said.
India's headline inflation unexpectedly accelerated 10.16 percent in May, heightening expectations the RBI would raise rates before its scheduled July review despite concerns over Europe's debt crisis.