Latest Data Shows Bihar Tops Inflation Rates, Jharkhand Lowest
In a recent report, Bihar emerged with the highest inflation rate of 5.9% among states and Union territories in July. Following closely behind was Assam at 5.1%, with Jharkhand recording the lowest rate at 1.7% for the month. Odisha and Uttar Pradesh posted rates of 4.8% and 4.6% respectively, while Haryana and Kerala both recorded 4.5% inflation rates.
Out of the 22 states and Union territories surveyed, 20 of them reported inflation below 5%, falling within the Reserve Bank of India’s upper tolerance band and marking a significant respite from previous months’ inflationary pressures.
The latest data released by the National Statistical Office revealed that retail inflation had softened to a near 5-year low in July, attributed to a moderation in prices of vegetables, fruits, and spices, as well as the impact of a statistical high-base effect.
Retail inflation, as measured by the consumer price index, dropped to a 59-month low of 3.5% in July, lower than the 5.1% in June and significantly below the 7.4% recorded in July last year. Rural inflation stood at 4.1%, while urban inflation was nearly 3%. The food price index was also down to 5.4% from 9.4% in June.
According to experts, the variation in inflation rates across states and rural-urban sectors is significant. The Economic Survey for 2023-24 highlighted that states witnessing elevated food prices also experienced higher rural inflation, with a wider rural-to-urban inflation gap in states with higher overall inflation.
There are expectations for the RBI to consider interest rate cuts, contingent on the trajectory of food prices. Economic think tank QuantEco suggested a pivot towards easing in the third quarter of FY25, foreseeing 75 basis points of cumulative monetary easing in this cycle, with 50 basis points expected in the second half of FY25.
