The rise in Wholesale Price Index (WPI)-based inflation is in line with the industry’s expectation, Assocham said on Tuesday, but added that the government must take “strong action” to address the structural issues of demand and supply within the industry.
WPI inflation has been on the rise for four straight months and shot up to 3.55 per cent in July.
Warning that the increase in WPI inflation may also extend to retail inflation that would impact households and the final consumers, Assocham called on the government to take concrete steps to minimise the transition of price rise from WPI inflation to consumer price index (CPI)-based inflation.
“Prices of items such as pulses, vegetables, fruits and fibres have been rising at the industry-level and policy-makers should address these through supply-side responses,” said D.S. Rawat, Secretary-General, Assocham.
The RBI, which is targeting retail inflation, would not be in a position to address demand and supply problems as CPI inflation was above the threshold of 5 per cent.