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18-Jul2017

Inflation outlook to remain muted till festival season: ASSOCHAM

With India set to reap a record foodgrains production and the industry not enjoying any pricing power, the industry body, Associated Chambers of Commerce & Industry of India (ASSOCHAM) in its latest report has stated that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali.

The association noted that there could be some disruption for one or two vegetable items such as tomatoes, having seen crop damage, but overall, the situation is going to remain quite comfortable for the consumers at least till October-November. Floods in some parts of the country, may also play a spoilsport. However, a vigil needs to be maintained for ensuring that farmers are protected from the market distortions and the procurement agencies like the Food Corporation of India and other government wings both at the Central and the State levels along with the cooperatives like NAFED  are fully geared to lift the farm produce in time and at remunerative rates.

According to the ASSOCHAM, the last three months have witnessed a dramatic fall in the WPI inflation from 5.11% in March to less than one per cent in June. The impact of bumper foodgrains and the entire cereals production is clearly visible. With the wheat harvest and arrivals of the new crop began from April, the wheat inflation saw a sharp drop from 11.33% in February, then to 6.33% in March and to 0.29% in June this year on an annualized basis. It noted that the biggest contributors to a sharp fall in inflation are the vegetable prices which have dropped by over 21% in June, 2017 year on year and added that the inflation should start reviving in the next few months.   

The industry body further said that the concept of e-platforms for the farm produce is excellent, but the same needs to be given a big push by the state governments, disallowing those middle men who may not be happy to shift to the transparent system of mandi operations. He also said the fact the inflation for manufactured food has dropped from a double digit to just about 3% clearly reflects easing of the raw material costs for the food processing firms thanks to abundant supply of farm produce.


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