Due to reduction in prices of food items, retail inflation rate at the national level came down to 5.22 percent in December 2024. However, retail inflation in Uttar Pradesh, Bihar, Uttarakhand and six other states remained higher than the national average. Among these, the highest inflation was recorded in Manipur, where the rate reached 9.4 percent. On the other hand, in Delhi this rate was only 2.51 percent, which is almost half of the national average.
States with inflation higher than the national average
| State | Inflation Rate (%) |
|---|---|
| Uttarakhand | 6.05 |
| Haryana | 6.08 |
| Uttar Pradesh | 6.26 |
| Bihar | 7.36 |
| Chhattisgarh | 7.63 |
| Odisha | 6.96 |
| Manipur | 9.4 |
| Kerala | 6.36 |
Main reasons behind inflation
1. Highest inflation in Manipur (9.4%)
The tense situation in Manipur and supply chain disruptions are the main reasons for inflation. Due to shortage of essential commodities people are forced to pay higher prices.
2. Why is inflation high in UP and Bihar?
- Economic situation:
- The number of workers in these states is high, and a large part of their income is spent on food items.
- Shortage of food products:
- Many essential commodities like pulses, spices and edible oils are not grown in these states.
- High transportation costs of goods imported from other states are driving up prices.
- States like Bihar and Jharkhand do not produce sugar, due to which their price is higher than other states.
3. Inflation is lowest in Delhi (2.51%)
- Trading Centre:
- Delhi is the main distribution center for food items for North India.
- Traders from nearby states bring goods to Delhi at cheaper prices, keeping prices low in the local markets.
- Cheap fuel rates:
- Petrol, diesel and CNG prices in Delhi are lower than other states, keeping transportation costs low.
Difference between rural and urban areas
Uttar Pradesh:
- Rural inflation rate: 6.89%
- Urban inflation rate: 5.16%
Bihar:
- Rural inflation rate: 7.29%
- Urban inflation rate: 7.57%
Uttarakhand:
- Rural inflation rate: 5.82%
- Urban inflation rate: 6.41%
Jharkhand:
- Rural inflation rate: 4.19%
- Urban inflation rate: 4.99%
The reason for higher inflation rate in rural areas is the higher proportion of food items. The contribution of food items in the rural consumption basket is 47.3%, while in the urban basket it is only 29.6%.
Pro. Arun Kumar (JNU)
- Differences between states:
- The ratio of rural and urban population has an impact on inflation.
- Due to strong supply system in urban centres, prices remain controlled.
- Supply Chain Impact:
- Prices have increased due to supply disruption in states like Manipur.
- One has to pay high prices for essential goods.
Overall Economic Impact:
- The difference in inflation depends on the economic activities of the state, production capacity and supply system.
- Prices remain stable due to the presence of trading and distribution centers in places like Delhi.
