It appears that inflation still remains a concern despite the latest government data released on Friday, showing a dip in the wholesale price index (WPI).
The WPI as of the week ending July 21 stood at 4.36% as against the previous week?s 4.41%.
Reserve Bank of India?s deputy governor Rakesh Mohan acknowledged the fact that inflationary pressures appeared firm despite various monetary measures undertaken to tackle inflation. Addressing a high-power macro economic workshop, organised by the State Bank of India here on Friday, Mohan said, ?there is no ground for being complacent on the subject.?
The country?s inflation level was much above the world average of 2.5%. Inflation, excluding energy prices, is still above 6%, ?which is not comfortable,? Mohan said. Higher food prices remain a concern and globally food prices currently are at elevated levels.
The RBI intends to reign in inflation by at least 150 basis points from the current figure, Mohan said.
On the massive capital inflows through the foreign institutional investors, Mohan said managing capital inflows remained a challenge before the RBI.
He emphasised the need of maintaining price and financial stability so as to sustain the economic growth of the country. Another concern expressed by Mohan was the global oil prices that are expected to rise further and this could spiral inflation upwards.
Money supply in the country was well above RBI?s estimates. However, Mohan expressed his satisfaction over the balance of payment outlook.
Touching upon some more areas of concern in the country Mohan said there was some evidence of stressed capacity utilisation and deceleration in corporate performance.
On the first quarterly RBI review of the monetary policy released earlier this week, Mohan said the overall stance of the policy was to reinforce the emphasis on price stability and well anchored inflation while ensuring monetary and interest rate environment to support export and spurt investment demand.
