Decline In WPI Inflation Creates Room For Rate Cut: PHD Chamber | SupportBiz

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Decline In WPI Inflation Creates Room For Rate Cut: PHD Chamber

 
The WPI inflation for the month of August 2014 declined to 3.74% from 5.2% in July 2014 and 5.7% in June 2014.

New Delhi: Decline in WPI inflation to 5 years low is really encouraging and would pave the way for a cut in interest rates in the coming times, said Sharad Jaipuria, President, PHD Chamber in a press statement issued here on Tuesday.

The industry is severely impacted by high interest rate regime coupled with increased costs of raw materials and wage rate spirals. At this juncture, it becomes inevitable to ease the monetary policy stance in terms of a cut in repo rate to facilitate business sentiments and to put industry on growth trajectory, said Jaipuria.

The decline in WPI inflation is attributed mainly to decline in inflation in primary articles (3.9%), fuel and power (4.5%) and manufactured goods (3.5%). The CPI has also slowed to 7.8% in August from 7.9% in July 2014.

The recent measures taken by the government such as check on hoarding, bringing onions and potatoes in essential commodities list and revival in monsoon conditions has helped to ease inflation, he said.

Going ahead, the effective implementation of policy reforms and check on hoarding at the grassroots level would help to strengthen the improved economic outcomes, said Jaipuria.