Inflation in negative zone for 16th month, falls 0.91% in Feb


New Delhi, March 14: Deflationary trend continued for the 16th month in a row as WPI inflation declined by 0.91 per cent in February, prompting India Inc to press for a rate cut by RBI to boost factory output, which has been contracting since November.

Subdued prices of certain food items and petroleum products kept the WPI inflation at (-)0.91 per cent in February as against (-)2.17 per cent a year ago. It was (-)0.9 per cent in January.

This is the 16th consecutive month since November 2014 when the deflationary pressure has persisted.

Food inflation stood at 3.35 per cent in February compared with 6.02 per cent in January, showed official data, which was released on Monday.

In view of declining inflation and negative industrial outlook, the industry stepped up its demand for an interest rate cut by Reserve Bank in its first bi-monthly monetary policy for 2016-17 on April 5.

“A further cut in the policy rate at this juncture and its transmission by the banks in the form of lower lending rates would benefit both, companies and consumers alike, and impart some momentum to the still weak investment and consumption cycle,” FICCI said.

Meanwhile, Assocham too pressed for a rate cut arguing the government has fulfilled its commitment of sticking to the fiscal consolidation path by deciding to keep the deficit for 2016-17 at 3.5 per cent of GDP.

“Therefore, it gives the room to RBI to ease liquidity and reduce interest rates to dispense with deficient demand in the economy,” Assocham said.

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The inflation print in the fuel and power segment was (-)6.40 per cent and for manufactured products, it read (-)0.58 per cent in February.


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