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India Inc expects prices to remain benign as inflation slows

Going forward, industry and experts anticipate prices to remain benign, estimating wholesale price-based inflation, which reflects the annual rate of price rise, to remain below 4 per cent till the year-end.

twitter-logoPTI | October 14, 2016 | Updated 17:55 IST
India Inc expects prices to remain benign as inflation slows

The Narendra Modi government's efforts to contain price rise have received a thumbs-up from India Inc, after September retail inflation fell to a 13-month low and  wholesale inflation easing on decline in food prices.

Wholesale inflation eased to 3.57 per cent in September as food articles, led by vegetables, witnessed softening of prices. Retail inflation in the month too dropped to a 13-month low of 4.31 per cent mainly on account of easing vegetable prices, data released on Thursday showed.

Exhorted by the fall in inflation, India Inc hoped that RBI will push banks to bring down lending rates further.

Going forward, industry and experts anticipate prices to remain benign, estimating wholesale price-based inflation, which reflects the annual rate of price rise, to remain below 4 per cent till the year-end.

The wholesale inflation in August stood at 3.74 per cent. CII Director General Chandrajit Banerjee said the anti-inflationary supply side measures of the government have been successful and rising inflation has been brought under control.

"With both retail and wholesale inflation moderating, there is a case for further cut in policy interest rate. Besides, falling industrial production has to be given a lift," Assocham Secretary General DS Rawat said.

"Good monsoons and government action have helped in abating the price level and various assessments indicate prices to remain benign. We do hope that going ahead banks will take a cue and further translate this into lower lending rates which is one of the key factors that can help boost IIP which continues to remain dismal," Ficci President Harshavardhan Neotia said.

Remaining in the negative zone for the second month in a row, industrial production contracted by 0.7 per cent in August due to slump in manufacturing, mining and capital goods segments.

"Despite the flaring up of crude oil prices in the current month, we expect WPI inflation to remain below 4 per cent in October-December quarter. Subsequently, WPI inflation is likely to rise to as much as 4.5 per cent in January-March 2017," Vice President & Senior Economist at ICRA Limited Aditi Nayar said.

The Monetary Policy Committee headed by RBI Governor Urjit Patel had last week cut benchmark interest rate by 0.25 per cent to 6.25 per cent.

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