Apex industry body ASSOCHAM stated that upward movement in wholesale price index (WPI) was likely due to the commitment shown by the Centre to support industry together with the recent Reserve Bank of India (RBI) policy stance to reduce interest rates to kick start investment and credit cycle.
“Price of products of national interest including pulses, food articles, cereals, and wheat have been continuously rising, the policymakers should check and address this through supply side responses,” said Mr Sunil Kanoria, president of The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
Going by sectoral composition, index of primary articles rose due to pulses, potato, non food articles, fibres, oil seeds and index of manufactured products rose due to food products, sugar, edible oils, beverages, tobacco and tobacco products.
“Retail prices of primary articles continue to benign in coming months due to the effect of delayed monsoon on agriculture which has brought in drought condition in several states, but RBI needs to look at generalized deflationary pressures shown by WPI till March 2017 that the consumer price index (CPI) may not adequately capture,” said Mr Kanoria.
“The April 2016 WPI figures may give some relief to manufacturers and producers which was limiting their potential to increase their pricing power and profitability,” he added.
“While inflation represented by the CPI for monetary policy is within the target level of the union government and the RBI, therefore the focus of the policymakers should now shift to revive gross domestic product (GDP), investor sentiment, consumer sentiment and industrial growth, especially the poor performance of manufacturing sector, capital goods and consumer non-durable goods as seen in the recent index of industrial production (IIP) numbers needs to be looked into immediately,” further said the ASSOCHAM chief.