Citing the near double-digit inflation, the Prime Minister’s Economic Advisory Council (PMEAC) today said that there is no sign of moderation in the rate of price rise to prompt the Reserve Bank to change its policy of monetary tightening.
“It is not a very comfortable situation. For the monetary policy stance to change, inflation has to come down and show signs of definite decline. But that kind of an indication has not come...,” the PMEAC Chairman, Dr C. Rangarajan, told a private news channel.
His comments followed the release of data which showed that the overall inflation remained close to the double-digit mark, at 9.72 per cent, in September on account of costlier food products, fuel and manufactured goods.
Inflation, as measured by the Wholesale Price Index (WPI), stood at 9.78 per cent in August.
For 10 months in a row, inflation has remained above the 9 per cent mark.
According to experts, the elevated inflation level is likely to put pressure on RBI to continue with its policy of monetary tightening.
The apex bank has hiked key policy rates 12 times since March 2010 to tame inflation. The bank’s next monetary policy review is scheduled for October 25.
During the central bank’s meeting at Jaipur this week, the RBI Governor, Dr D. Subbarao, said the rate hikes have affected industrial activities, but asserted that inflation continues to remain above the comfort level of around 5 per cent.
He also said that interest rates would come down only if inflation eased.
Meanwhile, in its Economic Outlook for 2011-12, the PMEAC had said that inflation is likely to remain elevated till the third quarter of the fiscal because of high prices globally.