Rising inflation risk

Ignoring it for long could increase longer-term costs

The latest inflation data has put the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) in a spot. The consumer price index-based inflation rate increased to a six-month high of 6.3 per cent in May, surpassing the upper end of the central bank’s tolerance band. The pickup in prices is fairly broad-based and should worry the central bank. While the food price index increased by 5 per cent, the fuel and light component went up by 11.6 per cent. But the momentum was not driven only by food and fuel components. Core consumer price inflation increased to