Business
India's wholesale inflation dips to lowest in six months
New Delhi, May 14
The annual rate of wholesale
price inflation (WPI) decelerated further to its lowest in six months
at (-)2.65 percent for April from (-)2.33 percent for the month before,
providing more room for the Reserve Bank of India (RBI) to ease its
monetary policy stance.
The annual rate of inflation based on WPI
was 5.5 percent in April 2014. According to official data, the
country's retail inflation based on the consumer prices index (CPI) was
also on a downswing in April, declining by 40 basis points to 4.87
percent.
The WPI data released by the commerce and industry
ministry said the decline was thanks mainly to a fall of 28.65 percent
in the prices of minerals and 13.03 percent in that for fuels.
Under
food articles, the price of potatoes was as much as 41.14 percent lower
in April this year over the like month of the previous year. Similarly,
the decline was 1.32 percent for vegetables and a marginal 0.04 percent
in rice.
But onions were dearer by 29.97 percent, pulses by
15.38 percent, fruits by 14.22 percent and milk by 7.42 percent. As a
result, the index for food articles gained 5.73 percent.
The
easing of global crude oil prices also had a significant impact on
prices of petroleum fuels, diesel contracting by 14.39 percent, petrol
by 18.44 percent and cooking gas by 6.06 percent.
The index for manufactured products was also down 0.52 percent April over April.
The
current data also kept India Inc's hope of a rate in the next monetary
policy review of the RBI scheduled for June 2, 2015 alive.
As
per the industry body Confederation of Indian Industry (CII), the
decline in WPI, which comes close on the heels of a drop in retail
prices, is driven by a drop in food prices even while the prices of fuel
and manufactured goods continue to be in the red.
"The benign
inflation outlook, fuelled by soft commodity prices and the
anti-inflationary policies of the government, should provide sufficient
elbow room to the RBI to continue with growth inducing policy in its
forthcoming monetary policy announcement," said Chandrajit Banerjee,
director general, CII.
Another leading industry body Federation
of Indian Chambers of Commerce and Industry (Ficci), the moderation in
price rise has been broad based and seen in major food articles, fuel as
well as manufactured products.
"Slight upside risk does persist
on account of unseasonal rains and possibility of below normal
monsoons. We are sure that the state and central government agencies
will make all efforts in balancing demand and supply and addressing
structural bottlenecks to control rise in food prices due to any such
exigencies," said Jyotsna Suri, president, Ficci.
The Associated
Chambers of Commerce and Industry of India (Assocham) said that though
the fall in wholesale inflation might bring some cheer to the consumers,
a constant decline in WPI figures also raises some concerns especially
for the manufacturing sector.
“The manufacturing decline has also
largely been contributed due to the contraction of sugar, edible oils,
textile, leather and leather products and rubber and plastic products
prices,†said Rana Kapoor, president, Assocham.
"The chamber
would like to re-iterate that a long term sequential drop of inflation
of manufacturing products could adversely impact their pricing power.â€
Kapoor
added that more emphasis should be laid upon supply management of some
essential consumption commodities such as pulses and onions as their
prices have shot up during the month.
Industry body PHD Chamber
of Commerce and Industry urged the RBI to reduce the repo rate by at
least 50 basis points in the forthcoming credit policy.
"Lower
WPI inflation is also expected to rejuvenate demand in the economy with
low and stable prices of the goods," said Alok B.Shriram, president, PHD
Chamber.
"At this juncture, it becomes inevitable that interest
rates environment is also in sync with decreased inflation," added
Shriram.