ASSOCHAM Business Barometer’s Inflation Outlook has revealed that majority of the corporate leaders are expecting the inflation rate to fall down to 6% level in view of the fiscal, monetary and administrative measures taken by the government and the normal monsoon forecast while the crude oil prices may remain an area of concern.

A quick ABB Survey of 240 CEOs and CFOs across various sectors has found that the industry outlook on inflation situation is optimistic as 68% of those questioned believed that the inflation rate would subside and slip to 6% in next 4 to 6 weeks.

Around 68% of the respondents felt that the prices mounting on food grains shall relieve in next 1 or 2 months. This is in view of the normal monsoon announcement by the weather department and 4% rise in food grains production in the fiscal 2008. The CEOs also believed that the global food crisis shall not remain so hot by the next quarter. But a high number of them were concerned over the escalating international crude oil prices.

Mr Venugopal N Dhoot president of ASSOCHAM said that "The strong measures taken by the government and the industry’s co operation should help to ease the pressure on prices. The speculative money driving inflation in commodities is also expected to exit the market soon."

While the government has not passed on the full burden of the oil prices to the consumers, its financials can come under severe strain if the similar situation persists, warned 95% of the respondents. Crude oil prices would continue to drive the inflationary pressures in coming months even if the food and commodity prices ease, about 92% of the CEOs stated.

The industry leaders expressed their faith in the strong measures taken by the government in curbing inflation. As many as 85% of them said that the fiscal and administrative measures would start showing their impact and the wholesale price index shall drop down in next two months time.

The fiscal steps taken by the government included abolition of import duty on steel, fresh ad valorem duty on cement priced above INR 250 per 50 kilogram bag. The tariffs have been cut to zero, for rice, wheat, pulses, edible oil and maize. The import duty has been slashed to 7.5% on hydrogenated oils and vegetable oils and to 30% on butter and ghee, and withdrawal of 4% additional countervailing duty on edible oils.

The cement and steel industry, where high input cost has been driving the prices northward, have announced voluntary price cut in co operation with the government’s efforts of curbing inflation.