Inflation outlook muted for more months, says ASSOCHAM

With the country set to reap a record foodgrains production and the industry not enjoying any pricing power, the inflation outlook remains quite muted at least till festival season of Durga Puja and Diwali, an analysis by India’s apex chamber of commerce and industry, The Associated Chambers of Commerce & Industry of India (ASSOCHAM) has suggested.

“The inflation, based on Wholesale Price Index (WPI)  for the past six months, between January and June, 2017 clearly shows that there has been a sharp drop in the pace of price rise , not only in the headline number to below one per cent but also in several individual items of interest to the common household. Besides, the inflation for the manufactured products, more so for the manufactured food products, has seen a significant decline in the past six months,” the ASSOCHAM note said.

The headline WPI inflation has dropped in the past six months from 4.26 per cent in January, 2017 to 0.90 in June this year. For the manufactured products, it has decreased from 3.37 per cent to 2.27 per cent, while for the manufactured food products, the figure has dropped from 10.73 per cent to 3.09 per cent on the annualised basis.
“Going forward, there could be some disruption for one or two vegetable items such as tomatoes, having seen crop damage, but overall, the situation is going to remain quite comfortable for the consumers at least till October-November,” the analysis states.

Commenting on the situation, ASSOCHAM secretary general DS Rawat said that the concept of e-platforms for the farm produce is excellent, but the same needs to be given a big push by the state governments, disallowing those middle men who may not be happy to shift to the transparent system of mandi operations.

The biggest contributors to a sharp fall in inflation are the vegetable prices which have dropped by over 21 per cent in June, 2017 year-on-year. “It is here, the inflation should start reviving in the next few months,” the ASSOCHAM note added.