“Inflation is unacceptably high... we are very, very concerned... we are in full readiness to take appropriate action to contain inflation,” Reserve Bank Governor Y V Reddy said, a month ahead of the credit policy, to be announced on April 29.

Inflation spiralled to 6.68 per cent, much beyond the RBI’s comfort level of five per cent, prompting Finance Minister P Chidambaram to stress that the government would take all measures, monetary, fiscal and supply side, to combat it.

Attributing the sudden spurt in inflation to a surge increase in prices, mainly of food, fuel and metals, Reddy told reporters that some inflationary pressures were expected when the Central bank reviewed its monetary policy in January.

“Inflation has (now) turned out to be well more than anticipated,” Reddy said on the sidelines of a function here.

The RBI was “very concerned” about the impact of recent spurt in prices and inflationary expectations, Reddy said, adding that the government was already taking some measures on the supply side.

“This would help to contain inflation,” he said.

While RBI was in full readiness to take appropriate action to contain inflation, “any decision has to be taken carefully as the situation is extremely complicated”, he said.

Confident on growth

The RBI Governor said the Central bank was confident in terms of growth and stability and added the country would continue to be one of the best-performing economies in the world in the months ahead.