Economy
In charts: Does your state face an inflation curse?
Summary
If you live in Telangana, Tamil Nadu or Rajasthan, you’d have faced inflation rates higher than the national average quite often over the last decade
For a diverse country such as India, it is no surprise that inflation rate, too, differs across its states. While the Centre releases an all-India figure for retail inflation every month, it also releases state-level data, which shows inflation varying from low single digits to even double digits at times. This is because price trends vary across states, as do items’ weights in each state’s inflation basket, based on their consumption patterns. If you live in Telangana, Tamil Nadu or Rajasthan, you’d have faced inflation rates higher than the national average quite often over the last decade. Gujarat, Punjab and Delhi are at the other extreme. Here’s what a Mint analysis of a decade of inflation data found:
Fuel-led inflation
Since 2012-13, Telangana, West Bengal, and Tamil Nadu have seen the steepest cumulative price rise among large states. An average item worth ₹100 a decade ago is now worth ₹175 or more in these states. Fuel has been the biggest driver. In Tripura, the ‘fuel and light’ component of the inflation basket is now worth three times what it was in 2012-13. The rise has been smoother for Rajasthan (1.25 times increase). Price pressures depend on factors such as demand, supply, local policies, infrastructure, consumption, and incomes. States with high subsidies may see lower inflation, while those with high taxes on fuel could see higher inflation.
States of inflation
A useful way to assess each state’s inflation patterns is to compare its price rise with that of the country in each quarter. We did this for the last 10 years and found that even amidst the ups and downs over time, some states have consistently seen high inflation and some tend to have benign price rises. Telangana’s inflation exceeded the national average 68% of the times (the most frequent), while Gujarat exceeded just 29% of the times (the rarest).
Note: Quarterly inflation rates considered for Q1 FY14 to Q4 FY23 (40 quarters, except Q1 FY21 and Q1 FY22, for which state-wise data was not available). The analysis covers 32 states and Union territories for which data was consistently available. The impact of a state's inflation rate on the national inflation rate varies due to different weightages, which range from 0.01% for Lakshadweep to 13.18% for Maharashtra.
6.42%: Average inflation in Tripura between FY13 and FY23 (India: 5.5%). Delhi, Chandigarh and Himachal Pradesh were the only ones with <5%.
35 out of 38*: The number of times Andaman and Nicobar Islands had a 4%-plus quarterly inflation rate in the last 10 years. Kerala had it 32 times.
1.01%: The biggest urban-rural disparity in a state’s average inflation rate (Manipur: urban 5.28%, rural 6.29%)**.
75%: The share of states with greater cumulative rural inflation than urban**.
*Data for two quarters was not available. **11-year change as FY13 rural data not available. All cumulative changes based on CAGR.
Staple trends
There is an important regional aspect to inflation. Food and vegetable prices are known to be volatile but this is not just a trend seen on a month-on-month basis but region-wise, too. An analysis of essentials such as rice, wheat, onion, potato and tomato shows that prices tend to be higher in southern and north-eastern parts of India. Rice, wheat and potato see the highest region-wise variation in prices, and onion sees more uniform prices across India.
Note: Data till 7 June 2023.
