Consumer inflation still high, says Rajan - Citi

MUMBAI (Reuters) - India's consumer price inflation may be below its peak but is still high due to supply-side constraints, while food prices remain another concern, Citigroup quoted Reserve Bank of India Governor Raghuram Rajan as saying during an investor conference.

"Inflation still remains high on supply-side rigidities. Food inflation is a source of discomfort and given the sub-par monsoon this year, there is a need to keep an eye on food inflation," Citigroup reported Rajan as saying at a meeting with U.S. investors on Thursday.

Citigroup provided a summary of Rajan's presentation in a report.

Rajan also reiterated his aim to bring down consumer price inflation to 6 percent by January 2016, Citigroup said.

India's CPI accelerated to a two-month high of 7.96 percent in July, driven by surging prices of vegetables, fruit and milk.

Rajan also said foreign investment limits in government bonds would continue to be steadily increased, although Citigroup said he was "comfortable with current levels."

Turning to economic growth, Rajan said he expected gross domestic product to expand towards 7 percent over the next three years due to political stability and improvement in the business and investment climates.

(Reporting by Suvashree Dey Choudhury; Editing by Rafael Nam and Anupama Dwivedi)