The Confederation of Indian Industry has said that the continuing inching down of wholesale price index (WPI) inflation is sure to lift the market sentiment, noting that the core inflation has continued to decline.
“The WPI inflation print has continued to move into the negative territory for the eighth consecutive month. Coming close on the heels of a moderate rise in retail prices, the inching down of WPI inflation is sure to lift market sentiment. The decline in wholesale price inflation is attributed to the deceleration in food prices even as there is a marginal uptick in fuel and power inflation,” CII director general Chandrajit Banerjee said.
“What is notable is that core inflation, which denotes demand side pressures in the economy, continues to decline. The fall in manufacturing prices point to demand conditions which are yet to become robust. We expect, going forward, the softening of oil prices and the moderation in food inflation due to better than expected monsoon would dampen price pressures and prevent inflation from making a comeback anytime soon,” he added.
“The near static price line and benign inflation outlook should propel the RBI to continue with its rate easing cycle in its forthcoming monetary policy to support investment and consumption demand especially as industrial production has recorded a muted performance and the consumer goods sector has moved into the negative terrain in May after showing promise in the previous month,” he further said.