Petrol price hike to further fuel inflation: RBI

Overall inflation in August rose to 9.78 per cent,which is much higher than the RBI’s comfort level of 5-6 per cent.

“In the current scenario,with the likelihood of inflation remaining high for the next few months,rising inflationary expectations remain a key risk,” the RBI said after hiking key interest rates by 25 basis points.

The central bank further said the current level of high inflation makes it imperative to continue with the anti-inflationary stance and tight monetary policy.

The future monetary policy stance,it added,would depend on the level of inflation.

According to the RBI,its tight monetary policy regime has helped in containing inflation and anchoring inflationary expectations. It has raised interest rates 12 times in the past 18 months to check price rise.

“There is still an element of suppressed inflation.

Though global oil prices have moderated,the pass-through to domestic prices remain incomplete,” RBI said.

Global oil prices are currently hovering around USD 110 per barrel. India imports 75 per cent of its oil and gas requirements from abroad and high international prices have impacted the profitability of the oil marketing companies.