Inflation numbers upsetting and a concern: P Rangarajan

Describing the rise in inflation to above 9% as "upsetting", the Prime Minister's Economic Advisory Council (PMEAC) today pitched for further tightening of the monetary policy by the RBI at its next review, which is due on Thursday.

"I think the inflation numbers are in a sense upsetting. We need to address the issue of inflation even more strongly. We need to use more monetary and fiscal policy to contain inflation," PMEAC Chairman C Rangarajan told reporters.
His reaction came after the release of the latest data, which showed headline inflation going up to 9.06% in May from 8.66% in April on the back of rising prices of manufactured products and petrol.
Asked about the expected hike in policy rates by the Reserve Bank at its mid-quarterly review on June 16, Rangarajan said: "I think the RBI will probably look at the inflation issue more seriously and will take some action. It will probably decide to do in the context of the high level of inflation."
He, however, refused to cite any numbers on the quantum of the hike in short-term lending (repo) and borrowing (reverse repo) rates.
"I do not know what the RBI will do, but I think the concern regarding inflation will be very dominant," he said.
The RBI has already hiked key policy rates nine times since March, 2010 to curb demand and tame inflation. With headline inflation remaining high, it is now almost certain that the apex bank will go for another hike at its June 16 mid-quarterly review.
P Rangarajan said that the inflation numbers are upsetting and the concern regarding inflation will be very dominant. He stated that the RBI will look at the issue more seriously.
When asked on the issue of diesel price hike, Rangarajan said,