Inflation still too high, says RBI governor

Reserve Bank of India governor D Subbarao said on Tuesday that inflation is still at unacceptable levels and efforts should be made to rein in prices further to provide relief to the 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, particularly to provide relief to poor people," Subbarao said while addressing a gathering at an 'outreach programme' in Chhaproh, Himachal Pradesh, to make people aware of banking services.

He said rising prices had affected one and all and that it was one of the bank's priorities to contain inflation.

"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 the media, Subbarao said he was of the view that the hike in diesel prices by Rs5 per litre would increase inflation in the short run, but would help in the longer run.

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

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