'As inflation dips, RBI must continue slashing rates'

The wholesale inflation dipped to (-)2.06 percent in February as prices of food articles, manufactured items and fuel products fell during the month.

"While the subdued global commodity prices have aided the softening of inflation trend in India, weak market demand is also an important aspect.

RBI should take further measures to strengthen the demand impulses in the economy and continue with its rate cutting cycle in the coming month," said FICCI Secretary General A Didar Singh.

He said the government and Reserve Bank should also engage with banks to ensure that lowering of policy rates already affected is passed on to the investors and consumers in the form of lower lending rates.

Inflation in food articles category stood at 7.74 percent in February while that in manufactured products category, it was 0.33 percent, as per official data released on Monday.

The decline in prices of manufacturing goods points to fragile demand conditions and indicates that robust recovery has yet to set in despite the improved industrial performance evidenced last month, said CII Director General Chandrajit Banerjee.

"We are hopeful that RBI would cut policy rates by 100 basis points (or 1 percent) during the course of the year," Banerjee said.

The WPI inflation numbers would be taken into account by RBI for formulating its next monetary policy announcement, scheduled on April 7.

The RBI had lowered policy rates by 0.50 percent between January-March to prop up economic growth as it observed inflationary pressures easing.