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Updated: September 21, 2009 13:15 IST

RBI predicts 6 per cent inflation by March

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RBI Deputy Governor K. C. Chakrabarty.
Business Line
RBI Deputy Governor K. C. Chakrabarty.

With inflation turning positive after 13 weeks, the Reserve Bank on Friday said the wholesale price index may rise to 6 per cent by this fiscal end — a development that may pose challenges to the central bank in maintaining a stable monetary policy.

“We have always said by March it should be 5 per cent. It may become 6 per cent,” RBI Deputy Governor K.C. Chakrabarty told reporters on the sidelines of a seminar on financial inclusion.

He said if procurement prices increase 10 per cent every year food inflation cannot be less than 10 per cent.

“This is also partially policy oriented... We want to give more money in the hands of farmers,” he said.

When asked whether it will be a challenge for RBI to choose between promoting growth and stemming inflation, he said the challenge is also there.

The wholesale price index turned positive for the first time in 13 weeks, rising to 0.12 per cent for the week ended September 5 on inflating prices of essential food items.

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