Indians Buying Gold Instead of Putting Savings Into Banks

This is what the governor of the Reserve Bank of India said recently. Reuters reports that:

Reserve Bank of India Governor Duvvuri Subbarao expressed concern that high inflation was forcing people to indulge in buying gold rather than depositing funds with banks.

The government has announced several measures to discourage people from buying gold and prodding them to invest in financial instruments.

The ‘official’ (i.e. government reported) inflation rate in India is currently below 7%. Is that high enough to be a major concern to the public?

Or do the public not care about the ‘official’ inflation rate, but are instead focused on the big swings in prices, such as the 40% plus increase of basic commodity prices in the past three years?