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This is what India Inc said about wholesale inflation

"Subdued growth as indicated by the recent Index of Industrial Production (IIP) numbers for the month of May 2015 certainly warrants cutting the interest rates to boost domestic supply response," said Mr Rawat.

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Welcoming the downtrend in wholesale price index (WPI), apex industry body ASSOCHAM reiterated that a long term sequential drop of inflation of manufacturing products does not augur well for the manufacturers as it could adversely impact their pricing power.

"With prices seemingly under control, the Central Government and the Reserve Bank of India (RBI) should focus more on boosting the economic growth," said Mr D.S. Rawat, secretary general of the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

"Subdued growth as indicated by the recent Index of Industrial Production (IIP) numbers for the month of May 2015 certainly warrants cutting the interest rates to boost domestic supply response," said Mr Rawat.

"The RBI has to ensure that cost of finance to the end user becomes competitive as such the upcoming bi-monthly monetary policy must give due consideration to reviving industrial growth in the country, more so as a low interest rate regime would mean that borrowers can borrow money at a lower interest rate and that would lead to increased purchasing power of consumers and as a result the demand for the goods will increase," he added.

"The government on the other hand needs to ensure swift policy action for creating conducive environment, which in turn ensures a strong supply response," further said Mr Rawat.

Some signs of the moderation in the demand for manufactured items can also be inferred from the recent IIP numbers especially when looked upon from the purview of use based industries, capital goods and consumer goods sector in particular. Impact on manufacturing firms can also impact labour demand.

The annual rate of inflation stood at -2.40 percent for the month of June, 2015 over June, 2014 as compared to 5.66 percent that was seen during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 1.42 percent compared to a build up rate of 1.50 percent in the corresponding period of the previous year.

Numerous categories have contributed to the WPI decline, it seems to have benefited from softening of primary articles, fuel and a drop in the prices of manufacturing goods.

The annual rates of inflation for primary articles, fuel & power and manufactured items stood at -0.76 percent, -10.03 percent and -0.77 percent in June 2015 as against the 7.01, 9.04 and 3.95 percent observed in June 2014 respectively.

However, the prices of some of the essential consumption commodities such as pulses and onions have shot up during the month as compared to the previous year. "Therefore, emphasis needs to be laid upon the management of supply of these items." 


WPI inflation print has continued to move into negative territory: CII

The Director General of CII, Chandrajit Banerjee, has noted that the Wholesale Price Index (WPI) inflation print has continued to move into the negative territory for the eighth consecutive month.

"Coming close on the heels of a moderate rise in retail prices, the inching down of WPI inflation is sure to lift market sentiment. The decline in wholesale price inflation is attributed to the deceleration in food prices even as there is a marginal uptick in fuel and power inflation," said Banerjee while commenting on the headline inflation for June 2015.

"What is notable is that core inflation, which denotes demand side pressures in the economy, continues to decline. The fall in manufacturing prices point to demand conditions which are yet to become robust. We expect, going forward, the softening of oil prices and the moderation in food inflation due to better than expected monsoon would dampen price pressures and prevent inflation from making a comeback anytime soon," he added.

The CII Director General further said the near static price line and benign inflation outlook should propel the RBI to continue with its rate easing cycle in its forthcoming monetary policy to support investment and consumption demand especially as industrial production has recorded a muted performance and the consumer goods sector has moved into the negative terrain in May after showing promise in the previous month.

Inflation expected to remain within RBI’s indicative trajectory: FICCI

FICCI president Dr. Jyotsna Suri has said that inflation is expected to remain range bound and within the Reserve Bank of India’s indicative trajectory this fiscal year.

Dr. Suri said the wholesale price index based inflation rate remained unchanged at (-) 2.4 percent in June 2015. 

“The pickup in monsoons in June augurs well for agri-production in the coming months. Inflation is expected to remain range bound and within Reserve Bank of India’s indicative trajectory this fiscal year,” she added while commenting on WPI inflation data for June 2015.

Dr. Suri further said the IIP numbers, however, remain volatile and there is a critical need to firm up industrial growth.

“The demand situation in the economy is still weak and industries across sectors are operating at sub-optimal capacity. We hope that the Reserve Bank would maintain its accommodative stance in the third bi-monthly statement for 2015-16 to be announced next month. In fact, industry would like to see a deeper cut in the policy rate and its equivalent transmission by the banks in the form of lower lending rates,” added Dr. Suri. (ANI)

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