Retail inflation higher in low-income states

“This shows those who are more vulnerable to price shocks are bearing a higher inflationary burden,” Joshi said.

By: ENS Economic Bureau | New Delhi | Updated: March 21, 2016 12:32 am
inflation The data revealed while inflation in urban India was just 4.30 per cent, that in rural areas was as high as 5.97 per cent.

Despite a fall in retail inflation to 5.18 per cent in February from a 17-month high of 5.69 per cent in the previous month, most of the lower-income states witnessed higher retail inflation than the richer ones.

According to DK Joshi, the chief economist at Crisil, higher-income states like Haryana, Kerala, Uttarakhand, Maharashtra and Gujarat saw lower retail inflation in February than Bihar, Jharkhand, Odisha and Chhattisgarh. While a relatively richer state like Punjab witnessed the lowest level of consumer price index-based inflation (2.7 per cent) in February, Odisha, adjudged in 2013 the most backward state by a panel headed by Raghuram Rajan, which developed a new index for backwardness, recorded the highest inflation of 8.04 per cent, showed the official data released this week.

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The data revealed while inflation in urban India was just 4.30 per cent, that in rural areas was as high as 5.97 per cent. “This shows those who are more vulnerable to price shocks are bearing a higher inflationary burden,” Joshi said. He, however, added that a clearer picture could emerge only if data for a longer period is analysed.

Already, rural India is reeling under stress due to a second straight year of monsoon failure, the resultant lower farm harvest and a crash in global commodity prices that have pulled down export earnings. This was reflected in a drop in bike sales this fiscal and subdued wage growth.

Even consumer non-durables output, as tracked by the index of industrial production, witnessed a 3.1 per cent contraction between April and January despite a favourable base (the segment had grown just 0.3 per cent a year before). The latest Union Budget focused on increasing agricultural productivity and enhancing rural income with higher-than-normal rise in allocations.

Inflation in rural India at 5.97 per cent

* Higher-income states like Haryana, Kerala, Uttarakhand, Maharashtra and Gujarat saw lower retail inflation in February than Bihar, Jharkhand, Odisha and Chhattisgarh

* While inflation in urban India was just 4.30 per cent, that in rural areas was as high as 5.97 per cent

* Odisha recorded the highest inflation of 8.04 per cent

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