Commenting on the WPI data that was released today, Mr Ajay S Shriram, President, CII said that “CII welcomes the steep fall in headline inflation, which has dropped to zero per cent in November as against 1.77 per cent growth evidenced in October owing to a broad-based decline in all sub-indices, which is significantly better than market expectations. What is also noteworthy is that both food and fuel prices have entered the negative terrain during the month. This data comes close on the heels of a drop in retail inflation to a low of 4.38% in November, thereby reaffirming the moderation of the inflation print which in turn would have a beneficial impact on inflationary expectations.”

CII has said that going forward, the continuing slowdown in global commodity prices as well as the government’s resolve to rein in the fiscal deficit would prevent prices from moving upwards. According to Mr Shriram, “this should induce the RBI to rethink its cautious monetary stance and urgently move towards a growth propelling monetary policy. The RBI should not wait till the next monetary policy announcement and reduce interest rate substantially, as industrial production is in the red and investment and consumption demand are yet to show visible signs of a pick-up.”

New Delhi

December 15, 2014