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Pressure increases on the govt as WPI inflation reaches 05-month high level
India's Wholesale Price Index (WPI) based inflation rose to a five-month high of 6.01 per cent in the month of May. The reason behind this rise is higher prices of food and beverages like coffee, tea, poultry, fish and vegetables. The WPI-based inflation was 5.20% in April and 4.58% a year ago in May.

Thedata was released by the Commerce and Industry Ministry today, justdays after the release of data showing consumer price inflationhitting a three-month low of 8.28% in May. The central bank closelytracks consumer inflation when setting interest rate policy.

Whilereacting on the WPI data, Chandrajit Banerjee, Director General, CIIsaid that spike in inflation is a cause for concern.

Healso explained the impact of this high inflation on the industriesand said, ?Containing the spiral of rising price pressures is ofutmost importance to revive industrial production especially aspersistent inflation has caused the interest rate to follow a tighttrajectory and has added to the cost of capital for industry. As aresult, growth is impacted. Hence, tackling food inflation shouldassume centre stage in order to bring growth back to the economy.?

Banerjeesuggested the government to address the problem of rising foodinflation by considering a multi-pronged approach which includesimplementation of model APMC Act, developing advanced supply chains,rationalizing input subsidies, effecting moderation in MSP,right-sizing buffer stock, effective management of non-cereal fooditems especially protein based, improving agri productivity and focuson crop diversification, augmenting investment in agri-infrastructureand encourage FDI in retail.

SidharthBirla, President, FICCI also responded on this issue saying,?Inflation remains a key impeding factor to the overall growthprospects of the economy. With food and fuel prices being the keydriving factors, upside risks to inflation continues. The sub parmonsoon outlook for this year could put pressure on food prices goingahead.?

Birlaalso appreciated the Prime Minister's indication towards, takinginflation as a serious concern and giving it the top priority.

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