Deflationary trends continued for the ninth month in a row in July, pulling down WPI inflation to historic low of (-)4.05 per cent, on cheaper commodities as India Inc raised pitch for a rate cut by RBI ahead of its September 29 review.
The WPI number follows retail inflation data which had slipped to a record low of 3.78 per cent in July.
Describing the softening of prices as a “positive sign”, Finance Minister Arun Jaitley said inflation is under control and all macroeconomic indicators are extremely encouraging.
The overall wholesale price index-based (WPI) inflation was (-)2.40 per cent in June, government data showed today. It has been in the negative zone since November 2014. A year ago in July 2014, inflation was 5.41 per cent.
During the month, pulses, milk, edible oil, egg, meat and fish turned dearer.
When asked whether it was time for the Reserve Bank to cut interest rate, Jaitley parried the question, saying in a lighter vein, “I am sure we all know the relationship now.”
India Inc, however, was more candid and stepped up its demand for rate cut, saying it will propel domestic demand and boost investments and growth.
“The distinct downturn in both retail and headline inflation and soft inflationary scenario make a strong case for RBI to resume its accommodative policy stance and reduce interest rates even before the next monetary policy,” CII Director General Chandrajit Banerjee said.
RBI Governor Raghuram Rajan, after the monetary policy announcement on August 4, had said that the central bank may cut interest rate even out of the policy cycle depending on how macroeconomic indicators play out.
RBI mostly tracks the consumer price inflation for its policy decisions and its next review is due on September 29.