High inflation remains a cause of concern: C Rangarajan

Thursday, January 6, 2011

NEW DELHI - Expressing concern over the skyrocketing prices of commodities, Dr. C Rangarajan, Chairman of Indian Prime Minister’s Economic Advisory Council, said high inflation remained a cause of worry for the government.

Talking to reporters here on Wednesday, Rangarajan asserted that inflation above five percent would be troublesome for the Indian economy.

“Well, if the overall inflation remains at a reasonably high level, that is a matter for concern. Whatever may be the factor that triggers inflation if the overall inflation remains at the level, which is well above five percent, then it is an uncomfortable level. I think that we have always thought the inflation level should remain close to about four percent,” he added.

Union Finance Minister Pranab Mukherjee had earlier said that the year-end inflation might be around 6.5 percent even after the recent fluctuation in the prices of various commodities.

Though overall inflation moderated to 7.75 per cent in November from 8.58 per cent in October, food inflation has increased rapidly in the first half of December.

From 8.69 per cent during the week ended November 27, food inflation rose to 9.46 per cent for the week ended December 4. It rose further to 12.13 per cent in the following week, and shot up to 14.44 per cent for the week ending December 18.

High onion prices, coupled with that of milk, were blamed for high food inflation.

The Reserve Bank (RBI) last year raised policy rates six times to rein in inflation. However, in its mid-quarterly review in December, RBI refrained from raising these rates, since the system was facing cash crunch. (ANI)

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