Retail in Asia

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India’s retail inflation level remains high

The provisional Consumer Price Index (CPI) for the month of March 2014 shows that retail inflation level remained high in both urban and rural areas despite moderation in wholesale prices, which reflects the adverse impact of having an inefficient distribution system, the Associated Chambers of Commerce of India (ASSOCHAM) said on Wednesday.

"The existence of numerous tiers of agents in the consumer product distribution results in higher retail inflation which in turn leads to wage-price spiral," said D.S. Rawat, Secretary General of ASSOCHAM."Rising nominal wages, supply constraints especially in infrastructure, demand-supply imbalances in various regions are pushing the retail prices higher and higher."

The figures released indicate that the prices of primary consumer goods particularly, rice, potato, fruits, milk, eggs, meat and fish have registered higher growth in March 2014. Prices of textiles, leather and plastics, further contributed to high inflation.

"The election related spending could be a key driver of both wholesale and retail inflation," the ASSOCHAM said.

The industry body has been suggesting policies that allow the free movement of agriculture commodities, promoting investment in manufacturing, allowing FDI in retail, using MNREGA for creating capital assets, and improving retail distribution networks.

"The new government at the centre must pay necessary attention towards these measures for effectively containing high retail inflation problem," Rawat concluded.