Wholesale price index (WPI) based inflation has dropped to 0.9 per cent in June, from 2.17 per cent in May. The wholesale price index for all commodities declined by 0.1 per cent, according to a press release from the Ministry of Commerce and Industry.
Traders hope this will lead to an interest rate cut at the next monetary policy meeting. The WPI-based inflation had dropped from 3.85 per cent in April to 2.17 per cent in May.
ASSOCHAM hailed this, and urged government to address price related issues for products like paddy, milk and sugar and abatement in prices of pulses and vegetables.
“Continuous rise in prices of petrol and high speed diesel due to recovery in crude oil prices globally need to be taken care of by policymakers as it may have impact on import bills and subsequent impact on exchange rates,” said ASSOCHAM President Sandeep Jajodia.He added that it may have negative impact on input prices for industry which has already started feeling pressure on profitability margins.
“WPI numbers are expected to fall in coming months as risks to Indian economy continue to prevail in forms of continued uncertainties in due to rising global protectionism, geo-political tension and it could further delay meaningful recovery of external demand,” said Jajodia.
But all is not great just because of this drop in inflation. “Even private investments continue to face several impediments in form of corporate debt overhang, stress in financial sector as companies' non-performing assets (NPAs) continue to increase due to reasons like excess capacity, regulatory and policy challenges,” said the ASSOCHAM chief.
