India’s retail inflation has been a bugbear for the economy since it surged past 6% in January, but there are wide disparities in the pace of price rise experienced by consumers across the country, with a dozen States clocking an average inflation of less than 6% and another 12 States averaging over 7% through 2022 so far.
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While headline inflation measured by the Consumer Price Index has averaged 6.8% in the first seven months of 2022, well above the 6% upper tolerance threshold set by policy makers, retail prices in States like Kerala (4.8%), Tamil Nadu (5.01%), Punjab (5.35%), Delhi (5.56%), and Karnataka (5.84%) have been rising at less than 6%. Smaller States like Manipur, Goa and Meghalaya have had an average inflation of less than 4% through this period, at 1.07%, 3.66%, and 3.84%, respectively.
As many as 14 States, along with the erstwhile State of Jammu & Kashmir, have witnessed price rise higher than the national average through 2022, with all but two of these States seeing higher than 7% inflation. Consumers in Telangana, West Bengal and Sikkim faced the steepest spike in prices, with their combined retail inflation for rural and urban areas averaging 8.32%, 8.06%, and 8.01%, respectively.
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Some of the other major States where inflation has stayed sharply elevated include Maharashtra and Haryana (7.7%), Madhya Pradesh (7.52%), Assam (7.37%), Uttar Pradesh (7.27%), Gujarat and J&K (7.2%), as well as Rajasthan (7.1%).
“The variation in the States’ inflation rates is mainly on account of two factors,” said Madan Sabnavis, chief economist at Bank of Baroda. “One is food prices, where non-producing States have higher inflation as transport prices get added. Second is that some States lowered fuel prices while others didn’t, which also made a difference,” he said.
Moreover, States that have more rural areas than urban areas face a higher inflation as the rural segment of the Consumer Price Index has a higher weightage for food costs, Mr. Sabnavis pointed out.
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Arunachal Pradesh, for which only a rural consumer price index is calculated by the National Statistical Office, has averaged 7.3% inflation this year, peaking at 9.2% in April when the headline retail inflation for the country had hit a 95-month high of 7.79%.
In Andhra Pradesh and Jharkhand, consumers have faced an inflation of 6.9% so far in 2022, just a tad higher than the national inflation average of 6.8%. Price rise in Bihar (6.07%), Chhattisgarh (6.4%), Uttarakhand (6.5%) and Odisha (6.6%) has been below the national average but above the Central bank’s tolerance threshold for inflation.
The Centre and BJP members have often castigated Opposition States over their failure to cut State levies on petroleum products amid high global prices to provide relief to consumers, after the government cut Central taxes on these products twice — in November 2021 and May 2022.
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During the debate on price rise in Parliament’s monsoon session at the beginning of this month, BJP MP Radha Mohan Das Agarwal had read out some States’ retail inflation numbers for the month of June and argued that all BJP States have lower inflation while all non-BJP ruled States have very high inflation.
The consumer price inflation for all States and Union Territories compiled by The Hindu, however, reflects an average price of 7%-plus throughout 2022 in several key BJP-ruled States, including Uttar Pradesh, Haryana, Madhya Pradesh and poll-bound Gujarat, as well as in Opposition-ruled States like West Bengal, Telangana and Rajasthan.
The argument that inflation is high only in Opposition-ruled States does not bear out, with quite a few of those States experiencing lower inflation than the national average as well as the 6% tolerance limit.
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Among the Union Territories, Dadra Nagar and Haveli has recorded the highest inflation through 2022 at 7.74%, followed by Andaman & Nicobar Islands at 7.16%.
Puducherry, Daman & Diu, and Chandigarh had relatively lower price rise averaging 5.9%, 6.1%, and 6.6%, respectively.
While Lakshadweep has had the lowest average inflation among Union Territories through 2022 at 5.59%, it has seen an alarming spike in recent months, with retail prices soaring by 7.9%, 9.8%, and 9.2% in the months of May, June and July, respectively.
While India’s overall retail inflation moderated to a four-month low of 6.7% in July, a few northeastern States, where price rise had been relatively subdued till June, recorded a sharp spurt during the month.
Nagaland and Tripura, where inflation had averaged less than 5.6% and 4.8% between January and June 2022, retail prices climbed by 7% and 7.73%, respectively. For consumers in Mizoram, where inflation had already been elevated at over 7% since February, prices jumped 9.43% in July.
The highest inflation during a month so far this year was recorded in Telangana, at 10.05% in June, but that has since subsided to a four-month low of 8.6% in July.