Inflation still high, says RBI governor

Mumbai: Ahead of the policy review by month-end, Reserve Bank Governor Raghuram Rajan has said that inflation is still high.

"... but inflation still remains high on supply-side rigidities," Rajan was quoted as telling a conference in Boston, USA, by the organisers Citi.

Rajan has hiked rates thrice in his year-long stint as the central bank Governor and continued to maintain the rates at high levels despite pressure from the pro-growth lobby.

The government too has taken a slew of measures to ease the supply-side constraints, especially to curb hoarding.

RBI will announce the bi-monthly review of the policy on September 30.

Rajan singled out food inflation as a growing concern in his speech last night.

"Food inflation is a source of discomfort and given the sub-par monsoon this year, there is a need to keep an eye on food inflation," he said.

It can be noted that the sown area for the kharif crop has fallen 3.2 per cent due to the lower rainfall.

Rajan said fall in inflation to current 8 per cent from a high of 11.2 per cent in November 2013 was due to monetary tightening, fiscal consolidation and food management policies.

RBI is aiming to contain the headline number at 8 per cent by January 2015, and bring it down further to 6 per cent by January 2016.