Sharp jump in WPI inflation shocking: PHD Chamber

India Infoline News Service | Mumbai |

We expect a calibrated policy stance in the coming times from RBI in terms of repo rate cut to revive the economic growth trajectory

Sharp jump in WPI inflation is unfortunate at the time when economy is impacted by multiple factors including high borrowing costs, high wage rates and increased raw material costs said Mr. Sharad Jaipuria, President, PHD Chamber of Commerce and Industry said on Tuesday
We expect a calibrated policy stance in the coming times from RBI in terms of repo rate cut to revive the economic growth trajectory. Revival of economic growth would pave the way for revival of investment sentiment particularly in the infrastructure sector that would ease supply side constraints and contain inflation, Jaipuria said.
The rise in WPI inflation is attributed mainly to supply side constraints in farm sector including steep rise in prices of vegetables and fruits. The WPI inflation increased to 5.7% in the month of March 2014 as against 4.7% during February 2014 and 5.2% in January 2014.
On the other side, industry growth is operating in the negative trajectory and is impacted by high costs of funds and other structural rigidities in the economic system like poor infrastructure and high transaction costs.
Industry growth performed in the worsening growth trajectory year after year; at 0.2% in FY2013-14, 0.8% in FY2012-13, decelerated to 6.7% in FY2011-12 from 8.5% in FY2010-11, he said
Keeping the interest rates high to solve the structural supply side constraints has increased the economic vulnerabilities and there has been little respite to inflation. We urge the Government to take effective measures to improve and fasten the supply chain process to prevent jump in prices of various commodities especially the food items which causes cascading impact on the overall WPI inflation scenario, Jaipuria added.
 

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