Inflation to remain high for few weeks: PMEAC

Even as food inflation fell to 9.03%, the Prime Minister's Economic Advisory Council (PMEAC) today said the rate of price rise would remain elevated for another one or two months and the RBI could continue with its policy of monetary tightening.

"While inflation may be coming down, it will still remain at a high level for the next one or two months at least. Therefore, the policy action must be directed towards containing inflation," PMEAC Chairman C Rangarajan said.

His comments came after release of latest data by the government which put food inflation at 9.03% for the week ended August 6, down from 9.90% in the previous week.

"The weekly data do show some softening of the food prices and the monthly [headline] data for July indicate that there is some slight fall in inflation even though it still remains at high level," Rangarajan said.

Headline inflation in July stood at an eight-month low of 9.22%. However, it was much above the Reserve Bank's 'comfort zone' of around 5%.

Though food inflation in the first week of August slipped vis-a-vis the previous week, all items barring pulses continued to register an upward climb on an annual basis.

Asked about the Reserve Bank's likely course of action in view of the sustained inflationary pressure, Rangarajan said: "RBI's policy will be dictated by the behaviour of inflation... They will probably continue with their current policy unless there are definite indications of fall in inflation".

The apex bank has hiked its key policy rates 11 times since March 2010 to curb inflation.

Headline inflation in the country has been above the 9% mark since December last year.

In its Economic Outlook for 2011-12 released earlier this month, the PMEAC had projected inflation to remain high at around 9% till October, before moderating to around 6.5% by March 2012.

The report said that while pressure from food inflation has fallen in recent months, the rate of price rice still remained quite high with the possibility of further surge in the coming months.