Inflation May Remain Sticky in 2012-13: RBI

Considering the pricing situation in the coming months, RBI said that inflation will remain sticky at current level of around 7% in 2012-13. This could be mainly due to high oil prices, increase in tax rates, wage pressure and structural hindrances to supply response.

RBI reports that GDP growth is likely to moderate in 2012-13, but risk to inflation is still on the upside. Earlier, RBI reported that annual Wholesale Price Index (WPI) inflation for March 2012 was 6.89% but the prices of essential items like pulses, potatoes and milk remained high.

In 2011, the inflation rate was observed to be 9.68%. Despite increased prices on food items, the annual inflation rate dropped to 6.89% in March from 6.95% in February 2012, while the growth during 2011-12 declined to three-year low of 6.9%. RBI said that monetary policy needs to support growth without risking inflation by excessive fuel demand.