The first nationwide Consumer Price Index (CPI) data shows that inflation came in at 7.65% for January. As expected, consumer price inflation is higher in urban areas, with year-on-year increase of 7.38% in rural areas and 8.25% for urban centres.
Strangely, though, consumer prices seem to have gone up more in rural India than in urban areas compared with 2010, the base year for the series.
The All-India CPI for rural India is 115 as of January, while that for urban India is 112.8. That means consumer prices have risen 15% in the last two years in rural areas, more than the 12.8% rise in urban centres.
This appears improbable, especially when we consider items such as medical care, education, recreation and amusement, which also show a larger price increase in rural areas compared with urban centres in the past two years.
Prices of food items, too, have increased more in rural India than in urban areas.
The chart compares consumer price inflation in India in January with that in other countries. Also given are the policy rates of central banks.
Also see | How India’s CPI compares with rest of the world (PDF)
The Chinese policy rate is the one-year lending rate, a long-term rate and, therefore, not comparable with the Reserve Bank of India’s repo rate.
Note that India’s CPI is one of the highest in the world, although we can have the satisfaction of comparing ourselves with Pakistan or Turkey.
But unlike quite a few central banks, our policy rate is higher than the rate of inflation, although not much.
Graphics by Yogesh Kumar