New Delhi : A decline in food prices dragged India’s annual rate of inflation based on wholesale prices to its lowest level in the last five months and prompted India Inc. to call for a monetary policy easing. According to data from the Ministry of Commerce and Industry, the wholesale price index (WPI), with the revised base year of 2011-12, decelerated further in May 2017 to 2.17 per cent from 3.85 per cent in April as food prices eased.
The wholesale prices had decelerated in April to 3.85 per cent from 5.11 per cent reported for March. However, the WPI in May 2016 declined to (-) 0.90 per cent.
The base year of the current WPI, which was revised last month from 2004-05 to 2011-12, does not include indirect taxes, thus, decreasing volatility in inflation at wholesale level.
The updated item basket of WPI has 697 items in the new series from the earlier 676. On a year-on-year (YoY) basis, expenses on primary articles, which constitute 22.62 per cent of the WPI’s total weightage, declined by (-) 1.79 per cent as compared to a rise of 4.38 per cent during the same month a year ago, reports IANS.
Meanwhile, India Inc. called for an easing of the monetary policy by the Reserve Bank of India (RBI in line with last month’s deceleration in the country’s annual rate of inflation based on wholesale prices.
“I think the case for supporting growth is getting stronger and we hope that RBI will take a relook into its monetary policy stance in the light of these new numbers,” said Ficci President Pankaj Patel.
“We need to boost investments and growth, which is so essential for employment generation across the economy.” Another major industry organisation, Assocham pointed out that the fall in WPI will have a consequent downward impact on CPI, which may allow the RBI to induce the demand in the country by reducing the interest rates. The industry chamber indicated that WPI data for the coming months is expected to fall as well.