The Reserve Bank of India (RBI) reiterated on Thursday its commitment to bring down the consumer price index to 6 per cent by January 2016, saying it was ready to use monetary policy to address high inflationary expectations and sticky core inflation.
Consumer price inflation (CPI) has been consistently high in India due to elevated food prices, which is seen as disproportionately affecting poorer Indians.
CPI rose to a two-month high of 7.96 per cent in July, with the core inflation at 7.4 per cent.
"Such rigidity in core component of inflation points to the inertia nature of inflation feeding into the elevated inflation expectations, which would necessitate credible anti-inflationary monetary policy," the RBI said in its annual report out on Thursday.
The RBI has previously said it aims to have CPI inflation fall to 8 per cent by January 2015 and to 6 per cent by January 2016.