Business
As wholesale inflation dips further, India Inc. seeks rate cut
New Delhi, April 15
Even as onion prices
continued to bring tears to consumers, India's annual rate of wholesale
inflation decelerated for the fifth successive month in March, thanks
mainly to a sharp dip in fuel prices, prompting India Inc. to seek rate
cuts by the central bank.
As per commerce ministry data on
wholesale price index (WPI) released Wednesday, the inflation rate
declined to (-)2.33 percent (March 2015 over March 2014) from (-)2.06
percent for the previous month.
The development was quickly
seized by industry chambers to suggest the Reserve Bank of India can
now consider a further cut in its lending rates to help in the recovery
that is taking place in the manufacturing sector, as both the wholesale
and retail inflations were on a downswing.
As per the latest
inflation data, prices of onions in March this year were still higher by
as much as 36.49 percent, while pulses, vegetables and fruits were
dearer respectively by 13.22 percent, 9.68 percent and 7.48 percent.
Fuel prices were sharply down.
Among the three major groups which
form the general index, the index for primary articles rose a tad to
0.8 percent for the period under review, while those for the
manufactured goods and fuels dropped to (-)0.19 percent and (-)12.56
percent, respectively.
Within the fuel and power segment, diesel
was cheaper by 12.11 percent and petrol by 17.7 percent due to a dip in
global crude oil prices, while LPG prices declined by 7.9 percent, the
data showed.
In the manufactured products segment, it was a mixed
bag. While cement and lime prices increased by 8.29 percent, that for
sugar, leather products and iron products declined, respectively by 4.24
percent, 2.74 percent and 5.98 percent.
The official data showed
that the month-on-month annual inflation has successively decelerated
in the past six months -- from 1.66 percent in October 2014 to (-)0.17
percent in November to (-)0.5 percent, (-)0.95 percent, (-)2.06 percent
and (-)2.33 percent, respectively, in the next four months.
As
per data on consumer price index released on Monday, inflation for March
eased to a three-month low of 5.17 percent, due mainly to a drop in the
prices of food articles.
The Reserve Bank of India (RBI), which
has been urged by India Inc. to lower interest rates, in its monetary
policy update had observed that the favourable effects of a low base
year, which had led to a drop in retail inflation, had now dissipated.
"The
still elevated levels of prices of protein-rich items such as pulses,
meat, fish and milk kept food inflation from following the seasonal
decline in prices of vegetables and fruits," the RBI said on April 7.
"Inflation
continues to remain moderate and has in fact declined when compared to
the previous month. This should persuade the Reserve Bank to resume its
rate-easing cycle to support growth," said Chandrajit Banerjee, director
general of Confederation of Indian Industry.
"The IIP (index for
industrial production) numbers released last week reported a
significant improvement in February which is encouraging," said Jyotsna
Suri, president of the Federation of Indian Chambers of Commerce and
Industry (Ficci).
"It will be imperative to support this buoyancy
to assure a sustainable turn around in the industrial sector. We look
forward to another round of downward revision in the repo rate in June
2015, or perhaps earlier," the Ficci president said.