New Delhi, Nov. 1: Finance minister, Mr Pranab Mukherjee on Monday said inflation is a matter of concern, indicating that the Reserve Bank could take some steps to check rising prices at its mid-year monetary policy review on Tuesday.
“Inflation is a matter of concern. The main reason for the high level of inflation is food prices. Inflation (is expected) to further go down to a more acceptable level,” Mr Mukherjee said at the IBA conference.
The overall inflation for September was at 8.62 per cent, much higher than RBI’s acceptable level of 5-6 per cent.
Food inflation, which has been in double digits for the past three months, is feeding the overall inflation numbers. Food inflation in mid-October stood at 13.75 per cent.
Mr Mukherjee’s comment come just ahead of the RBI’s second quarter monetary policy review on Tuesday, in which the central bank is expected to hike policy rates by 25 basis points to tame inflationary pressure.
When asked about the possible rate hike action by the central bank, Mr Mukherjee said, “Let us wait. RBI policy statement will be made shortly... I am in discussion with the RBI governor.”
Since January, RBI has started reversing its soft monetary policy it began in September 2008, when the global financial crisis deepened after the collapse of the US financial major Lehman Brothers.
While a few economists forecast another rate hike on Tuesday, others said that a slowdown in factory output numbers of August and core-sector figures of July might force RBI to give a rethink to its rate hike decision.
In a bid to tame inflation, the central bank has hiked its key short-term lending (repo) and borrowing (reverse) rates five times so far this year and experts see another 25 basis points hike in the key policy rates to be announced by RBI on Tuesday.