Decline in WPI on 'expected lines': CII

Confederation of Indian Industries (CII) Director General Chandrajit Banerjee has said that the decline in inflation was along 'expected lines', and added that it would provide

the Reserve Bank of India (RBI) sufficient room to continue with growth inducing policy in its forthcoming monetary policy.

"The decline of headline inflation for the sixth consecutive month is along expected lines. The decline in WPI, which comes close on the heels of a drop in retail prices, is driven by a drop in food prices even while the prices of fuel and manufactured goods continue to be in the red," Banerjee said in a statement issued by CII.

"The benign inflation outlook, fuelled by soft commodity prices and the anti-inflationary policies of the government, should provide sufficient elbow room to the RBI to continue with growth inducing policy in its forthcoming monetary policy announcement," he added.

Meanwhile, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has stated that a constant decline in WPI figures also raises some concerns especially for the manufacturing sector, even though it brings some cheer to the consumers.

"While a decline in inflation could create room for a more accommodative stance from the Reserve Bank of India in terms of rate cut in its next bi-monthly monetary policy, the chamber would like to

re-iterate that a long term sequential drop of inflation of manufacturing products could adversely impact their pricing power," said ASSOCHAM president Rana Kapoor.

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The Wholesale Price Index (WPI) fell for the sixth consecutive month and stood at minus 2.65 percent for the month of April. Inflation based on the Wholesale Price Index (WPI) has been dropping since November, 2014.