Inflation still at unacceptable levels: RBI governor

Reserve Bank of India Governor D Subbarao on Tuesday said inflation rate is still at unacceptable levels and efforts should be made to rein in prices further to provide relief, especially, to poor people.

"In the last two years, we have been able to bring down the rate of inflation but I admit that inflation is still high and it should further come down.

"Inflation should be brought down to provide relief (especially) to poor (people)," Subbarao said while addressing the gathering at 'Outreach Programme' to make people aware of banking services.

Rising prices, he said, had affected one and all and that it was one of the bank's priorities to contain it.

"Inflation has risen in the last few years…and prices of almost everything have gone up. Inflation has affected everybody but it has affected the poor people most," he said.

Later talking to media here, Subbarao said he was of the view that Rs 5 per litre diesel price hike would raise inflation rate in the short run.

"In short term, increase in diesel prices might cause inflation... In the long term, it (price hike) is good for economy including for inflation," Subbarao said.

On a query on plastic notes, Subbarao said the RBI was in the process of importing polymer notes which would be introduced on pilot basis. "We are in the process of negotiating the contract of importing of Rs10 polymer notes and introduce them on pilot basis. I cannot say how long it will take...but hopefully it will be soon".

Earlier during his speech, RBI Governor said he had received complaints about shortage of coins and soiled mutilated notes in rural areas and asked the commercial banks to help the RBI in resolving this problem.