New Delhi: Food inflation quickened in mid-October as prices of vegetables soared, sustaining the pressure on overall inflation and the Reserve Bank of India. The RBI has identified inflation as the top policy challenge. “Inflation continues to be a major macroeconomic concern. The headline WPI inflation has remained stubbornly high, averaging 9.6% during the financial year so far. Inflation has been broadbased, and driven by all the three major groups, primary articles, fuel and power and manufactured products,” RBI said in its monetary policy review. “As indicated in the first quarter review, both the level and persistence of inflation remain a cause for concern. Of larger concern is the fact that even with the visible moderation in growth, inflation has persisted,” the central bank said. The RBI has raised interest rates 13 times since March 2010 and has indicated that it may be over with its current tightening cycle if overall inflation eases to 7% by end-March. It has said further rate hikes “may not be warranted if the inflation trajectory conforms to projections”. But economists say inflation is unlikely to ease to 7% by March and could still hover around 8-9% putting pressure on RBI to maintain its tight policy stance.
TOI
