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'Govt must remove supply bottlenecks to trim retail inflation'

By Super

Govt must remove supply bottlenecks to trim retail inflation
New Delhi: Terming the rise in October retail inflation despite a bumper crop as "disturbing", India Inc today said the Government must immediately address supply side bottlenecks to bring down the consumer price inflation.

"To turn incipient signs of progress into a firm recovery, there is a need to address structural issues, which are creating supply side hurdles in the way of growth. The sustained high CPI is a direct fallout of inflation in primary articles, which needs supply side interventions," CII Director General Chandrajit Banerjee said.

Costlier vegetables, like onion and tomato as also fruits drove retail inflation to 10.09 percent in October, the second instance of it entering double digit in seven months.

"The increase in the retail inflation to 10.09 percent is quite a disturbing trend. What is even more disturbing is that the expectations of prices coming down because of good Monsoon seem to have been belied," Assocham Secretary General D S Rawat said.

"Given the fact there are bumper crop prospects, it is rather surprising and intriguing how there is over 12 percent inflation in cereals while 45 percent increase in vegetable prices," Rawat said.

The retail inflation measured in terms of consumer price index (CPI) was at 9.84 percent in September and 9.52 percent in the previous month.

Terming the escalation in the CPI inflation as "worrying" President of PHD Chamber of Commerce Suman Jyoti Khaitan said: "There seems to be a severe problem in supply side management as production is not reaching consumers' doorsteps easily. At this juncture, inflation can be tackled only by easing supply side constraints and improving infrastructure rapidly."

The vegetable prices rose 45.67 percent in October year- on-year, higher than 34.93 percent inflation recorded in the previous month, as per the government data released today. Similary fruits were dearer by 12.84 percent.


For CPI inflation, price data are collected from select towns by the National Sample Survey Organisation (NSSO) and from select villages by the Department of Posts.

Last month, the Reserve Bank had hiked the key lending rate (repo rate) by 0.25 percent to contain inflation in continuation of its hard-line stance.


Story first published: Wednesday, November 13, 2013, 9:47 [IST]
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