GUWAHATI: Assam recorded the second-highest inflation rate of 5.1%, with Bihar preceding and topping the list at 5.9% among states and Union territories in July.
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According to recent reports, Jharkhand recorded the lowest inflation rate at 1.7% in the latest retail inflation data. Odisha, which had been facing persistent price pressures, registered a rate of 4.8%, while Uttar Pradesh reported 4.6%. Haryana and Kerala both saw inflation rates of 4.5%.
Out of the 22 states and Union territories for which data is available, 20 reported inflation rates below 5%, which is below the Reserve Bank of India's upper tolerance limit. This marks a significant relief from the inflationary pressures experienced in recent months.
The National Statistical Office released data on Monday indicating that retail inflation eased to a near five-year low in July, largely due to a moderation in the prices of vegetables, fruits, and spices, as well as the impact of a statistical high-base effect.
Retail inflation, measured by the Consumer Price Index, dropped to a 59-month low of 3.5%, down from 5.1% in June and significantly lower than the 7.4% recorded in July of the previous year. Rural inflation stood at 4.1%, while urban inflation was close to 3%. The food price index decreased to 5.4%, down from 9.4% in June.
An official economic survey and report for 2023-24 noted that states have been experiencing variations in inflation rates, with rural inflation showing a higher disparity compared to urban areas. The rural consumption basket has a higher weightage of food items (47.3%) compared to the urban basket (29.6%). As a result, states with elevated food prices over the past two years also faced higher rural inflation. The survey also highlighted that states with higher overall inflation tend to have a larger rural-to-urban inflation gap.
Experts suggest that the Reserve Bank of India might consider cutting interest rates, but this will largely depend on the future trajectory of food prices.