In a good news for India’s growth story, wholesale prices remained in the negative zone and contracted for the 16th month in a row by 0.91 per cent in February, while retail inflation added more cheers by easing to a three-month low of 5.18 per cent in the same period as food prices, including vegetables, pulses and fruits became cheaper.
As India Inc pressed for a rate cut by Reserve Bank of India (RBI) to boost factory output growth, analysts were of view that RBI Governor Raghuram Rajan could be encouraged to take action and drive growth for the country.
In the recent Union Budget, Finance Minister Arun Jaitley also hiked annual State spending for the farm sector by 44 per cent for the next fiscal year to over $5 billion and eased import curbs to restrain price rises.
As wholesale prices have been contracting since November, subdued prices of certain food items and petroleum products kept the Wholesale Price Index (WPI) inflation at (-) 0.91 per cent in
February as against (-) 2.17 per cent a year ago. It was (-) 0.9 per cent in January. This is the 16th consecutive month since November 2014 when the deflationary pressure has persisted. Food inflation also stood at 3.35 per cent in February compared with 6.02 per cent in January, showed official data, which was released on Monday.
As far as retail inflation is concerned, cheaper food prices, including vegetables, pulses and fruits, helped February inflation fall to a three-month low of 5.18 per cent. Retail inflation, as measured by the Consumer Price Index (CPI), was at 5.69 per cent in January this year. In February last year, it stood at 5.37 per cent. The rate of price rise last month was the slowest since November, when the inflation print was 5.41 per cent. It also provided a break from a continued increase in inflation for five months; the rate of price rise had been on an upward trajectory since September 2015 when it had moved up by over a percentage point to 4.41 per cent.
In view of declining inflation and negative industrial outlook, the industry stepped up its demand for an interest rate cut by the central bank in its first bi-monthly monetary policy for 2016-17 on April 5. “A further cut in the policy rate at this juncture and its transmission
by the banks in the form of lower lending rates would benefit both, companies and consumers alike, and impart some momentum to the still weak investment and consumption cycle,” said a leading industry body FICCI.
As per the Government data, food inflation also for last month softened to 5.30 per cent as prices of vegetables, pulses, fruits and milk turned cheaper. “In January, it was 6.85 per cent. Inflation in pulses was lower at 38.30 per cent during the month, while the rate of price rise in vegetables was at 0.70 per cent. In January, it was 43.32 per cent and 6.39 per cent respectively,” it said.
Fruit prices turned into a deflation zone at (-) 0.72 per cent in February. Retail price rise of ‘cereals and products’ remained almost flat at 2.18 per cent and that for ‘meat and fish’ category, moved down with an inflation print of 7.27 per cent. “However, prices of eggs shot up significantly during the month with inflation standing at 6.19 per cent,” it added.