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Wholesale inflation in February eases to 9-month low
The wholesale price index (WPI) eased to a nine-month low of 4.68 percent in February 2014, which is lower than expected. Data released on Friday by the Ministry of Commerce and Industry showed that it has come down to 4.68 from 5.05 in January. And it is mainly because food prices cooled.

Industry body CII noted that headline inflation, has been on the downward trajectory since the last few months essentially due to a fall in food and fuel prices. There has been an appreciable drop in prices of vegetables, potatoes, onions, cereals, eggs, among others which is contributing to a drop in inflation rates.

The moderation in inflation should induce the RBI to make a shift towards a more accommodative monetary policy stance to revive investment and propel demand especially as investment demand is declining and consumer durables are in the red. Besides, core inflation, which tracks demand side pressures in the economy, continues to be stable.

It will help policymakers to breath coolly, and has raised expectations that the Reserve Bank of India will review on it in the upcoming monetary policy review on April 1. The wholesale price index (WPI) eased to a nine-month low of 4.68 percent in February, which is lower than expected.

FICCI's President Siddharth Birla said, “The decline in the WPI comes on the back of a similar trend observed in CPI a few days back. This easing of inflation will hopefully create some space for monetary policy easing by the RBI. This is imperative as the sentiment of caution continues to weigh heavy on the minds of investors. In fact according to a recent CEOs Poll conducted by FICCI, a majority 71% reported that high interest rate is a key factor holding back fresh investments.”

"Performance of the industrial sector still remains anaemic and we expect both the government and the central bank to work in tandem and create a pro-growth environment", added Birla.





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