RBI chief says retail inflation still high

Says there were several upside risk factors to inflation and the central bank has to remain sensitive to these

India's retail inflation still remains high despite the wholesale price-led inflation cooling off, Reserve Bank of India Governor Duvvuri Subbarao said on Friday.

He was speaking at an academic institution in the southern city of Hyderabad.

India's consumer price-led inflation was 9.39% in April, while the annual wholesale price-led inflation slipped below the crucial 5% threshold to 4.89%, also in April.

Subbarao also said that there were several upside risk factors to inflation and the central bank has to remain sensitive to these.

"Most importantly we also chase monsoon like millions of farmers across the country. So, the monsoon outlook, the monsoon performance is going to be the important factor in determining the RBI policy in the next three months," he said.

As per the Indian Meteorological Department (IMD) prediction, the monsoon is expected to be normal this year.

"The Reserve Bank will keep a track of growth as it evolves, keep track of inflation as it evolves and keep track of aspirations and inspirations as it evolves," he said.

The RBI is scheduled to unveil its first mid-quarter monetary policy review on June 17. There is pressure on central bank to cut policy rate in view of declining inflation and the urgency to boost sagging growth.

The Reserve Bank of India also extended restrictions on loans against security of gold coins per customer to all co-operative banks today in its continuing efforts to temper demand for the yellow metal.

In a notification to all state and central co-operative banks, the RBI said loans against the security of gold coin would be up to 50 grams per customer.

In the RBI's monetary policy in May, the central bank had announced the restrictions for banks.