New Delhi: As WPI inflation rate edged up to (-)4.54 percent in September, India Inc Wednesday said there is scope for banks to slash interest rates further and the green shoots of economic recovery are "visible".
Expressing concern on the rise in prices of food articles, industry bodies said the government must take steps to ensure the prices of essential commodities remain in check.
"Following the cut in the policy rate by RBI, several banks have revised downwards their base rate. However, there is room for further cuts in the lending rate by banks.
"As the gains of a lower interest rate regime get transferred to both consumers and investors, demand would pick up and we hope this brings pricing power back into the hands of producers," Ficci President Jyotsna Suri said.
WPI inflation rate rose marginally to (-)4.54 percent in September, with pulses, vegetables and onion turning costlier, even as the overall deflationary trend persisted for the 11th month in a row.
Assocham President Rana Kapoor said WPI inflation and IIP data indicate that "green shoots of economic activity might finally be becoming more visible".
Moreover, he said, swift policy action is desired for reviving investments and business confidence.
"Continuous negative growth of WPI inflation is facilitating the businesses in terms of increased price cost margins vis-?-vis decreased cost of raw materials. Also there are signs of revival in demand scenario," PHD Chamber President Alok B Shriram said.
"With inflation remaining on a comfortable trajectory, easy monetary policy stance would expand further in terms of more repo rate cuts as there is a strong need to boost demand in the economy," he added.
The wholesale price index-based inflation was (-)4.95 percent in August. It has been in the negative zone since November. In September last year, inflation was 2.38 percent.
Inflation in food articles inched up to 0.69 percent in September, from (-)1.13 percent in August.
"The central and state governments need to take proactive steps to contain any further rise in prices of essential commodities like pulses and onions," Kapoor said.
Onion and pulses turned dearer, with inflation at 113.70 percent and 38.56 percent, respectively, in September, as per official data released today.
The rate of price rise in vegetables was at (-)9.45 percent as against (-)21.21 percent in August.
Besides pulses and onion, the food items which became dearer in September were eggs, meat and fish (2.02 percent), milk (2.16 percent) and wheat (3.34 percent).
The Reserve Bank mostly tracks the consumer price index- based inflation for its monetary policy decisions.
CPI, or retail inflation, for September rose to 4.41 percent, from 3.74 percent in the previous month.
