FM says inflation a major concern

FM says inflation a major concern

New Delhi: Inflation in India has emerged a as a major concern and is driven by rising food prices, finance minister Pranab Mukherjee said on Tuesday.

The country’s inflation, measured by wholesale price index, was 8.62% in September compared with 8.5% in August, while inflation at retail level — measured by consumer price index — eased to 9.82% in September from 9.88% a month ago.

Earlier, Reserve Bank of India raised its lending and borrowing rates, for the sixth time this year, by 25 basis points each in its mid-year policy review.

The central bank lifted the repo rate, at which it lends to banks, to 6.25% and raised the reverse repo rate, at which it absorbs excess cash, to 5.25%, intensifying its fight against stubbornly high inflation.

The central bank aims to bring down headline inflation to 5.5% — equivalent to 6% under the old series with a different base year — by end-March 2011.