Ficci, Assocham urge RBI to cut rates after WPI cools down to 3.58%

As wholesale inflation eased to 3.58 per cent in December, India Inc today urged the Reserve Bank to reduce key policy rates to augment investments and boost economic growth.

"As the inflation numbers are being driven largely on account of supply-side factors, we urge the Reserve Bank of India to calibrate its monetary policy stance giving equal weightage to growth consideration.

"Lowering of the repo rate in the upcoming monetary policy is critical to boost investments and build the growth momentum at this juncture," Ficci President Rashesh Shah said.

Inflation based on wholesale prices eased to 3.58 per cent in December 2017 as prices of food articles declined even as fuel cost witnessed a surge. The WPI inflation was 3.93 per cent in November 2017 and 2.10 per cent in December 2016.

Assocham said inflation may remain high till April-June 2018, even as successive hardening of core inflation in last five months can be seen as a cause for concern.

"The policymakers need to take care of the continuous rise in petrol and high speed diesel prices due to rise in global crude oil prices which may have an impact on import bills and subsequent impact on exchange rates," said Assocham Secretary General D S Rawat.

As per government data released today, inflation on food articles slowed to 4.72 per cent in December, from 6.06 per cent in November 2017.

"We also look forward to the Union Budget to provide details on more specific measures towards strengthening of agriculture supply chain for effective management of food prices. At the same time, we hope to see inclusion of petrol and diesel under GST in coming months, which should also help in lowering the pressures of fuel inflation," Shah said.

Data released last week showed that retail inflation breached the RBI's comfort level to touch 5.21 per cent in December on rise in prices of food items, especially vegetables.

The RBI takes into account retail inflation while deciding on key policy rates. In its last policy review in December, RBI had kept key repo rate unchanged at 6 per cent and reverse repo rate at 5.75 per cent.