'Inflation deceleration to strengthen economy'

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SME Times News Bureau | 18 May, 2015
Continuous deceleration in WPI Inflation will help businesses in terms of increased price cost margins vis-a-vis decreased cost of raw materials, said Alok B. Shriram, President, PHD Chamber in a press statement issued in New Delhi.

WPI inflation declined from (-)2.33% in March 2015 to (-)2.65% in April 2015 which can be attributed to decrease in the prices of food articles(5.73%), Potato(-41.14%), Vegetables(-1.32%), fuel & power(-13.03%), petrol(-18.44%) and manufactured products(-0.52%).

Wholesale inflation has dropped to minus 2.65 per cent in April from minus 2.33 per cent in March.

Index for FUEL & POWER group declined by 1.7 percent to lower price of furnace oil (9%), petrol and high speed diesel (3% each), aviation turbine fuel (2%) and electricity (1%).

The index for 'Food Articles' group rose by 1.3 percent due to higher price of fruits & vegetables, gram and tea, poultry chicken and urad, arhar, ragi and fish-marine.

Lower WPI inflation is also expected to rejuvenate demand in the economy with low and stable prices of the goods, said Shriram.

At this juncture, it becomes inevitable that interest rates environment is also in sync with decreased inflation, said Shriram.

"We urge the RBI to reduce the repo rate atleast by 50 bps in the forthcoming credit policy," said Shriram.