India Inc cheers dip in June inflation

Moderation in inflation for the month of June is an outcome of recent measures like crackdown on hoarders taken by the Narendra Modi-led government, and could be an indication of economic recovery being round the corner, India Inc today said.

Industry bodies called for implementation of measures announced in the Budget to arrest inflation, saying these would pave the way for a stable inflation regime.

"The moderation in inflation together with the rebound in industrial production provides a positive signal that the structural bottlenecks afflicting the economy could be gradually showing signs of receding and green shoots of recovery may be around the corner," said CII Director General Chandrajit Banerjee.

"The Budget has provided a bold and positive thrust to agriculture. It is hoped that the measures announced in the budget for agriculture would be implemented on the ground which would address the supply side bottlenecks and pave the way for stable inflation regime for food products," he added.

After rising to a five-month high in May, inflation dipped to 5.43 per cent in June mainly on account of decline in prices of food items and vegetables with the exception of potato and onion.

"We appreciate the measures undertaken by the government to check hoarding and facilitating the supply chain in various essential commodities," PHD Chamber of Commerce President Sharad Jaipuria said.

"Announcements made in the Budget to improve agriculture infrastructure would go a long way to facilitate farm produce to deliver at consumers' doorsteps," he added.

As per the Wholesale Price Index inflation, prices of vegetables as a category declined by 5.89 per cent during the month, while that of potato and onion soared by 42.51 per cent and 10.70 per cent respectively in the wholesale market.

"After a set of focused measures undertaken by government last month to contain food inflation, budget announcements regarding establishment of a Price Stabilisation Fund and a commitment by Centre to work closely with states to re-orient their respective APMCs (Agriculture Produce Market Committee) are reassuring," Ficci President Sidharth Birla said.

However, Assocham President Rana Kapoor said the rise in prices of items used by the common man such as fruits, potato, rice and milk are worrisome.

"When potatoes and tomatoes grab headlines, they limit the policy space both with the Reserve Bank and the government to really go for bold measures. So, very effective and quick Central intervention is required with the help of the states to tame the prices of essential commodities, else bold reforms will remain non-starter," Kapoor said.

Food items that became costlier in June include fruits (up 21.40 per cent), followed by milk (10.82 per cent), egg, meat and fish (10.27 per cent) and rice (10.2 per cent).

The government has been taking steps to control prices of kitchen items like onions and potatoes.