Bihar has the lowest inflation rate and Telangana the highest — here’s why

• Inflation was lowest in Bihar at 4.7% and the highest in Telangana at 10%.
• Indicating supply chain problems, prices rose the most in peripheral states such as J&K and Ladakh, Arunachal Pradesh, Lakshadweep and Sikkim.
• While the prices of food in general rose by 7.7%, the game changer was the sharp rise in vegetable prices.

India’s retail inflation rose by 7% the same as last month, but not all Indians are feeling the heat of it equally.

According to Madan Sabnavis, chief economist of Bank of Baroda who believes that inflation is still a cause for worry, also says that – only half of the Indian states had inflation above 7%. The others have a different story to tell.

“The lowest was in Bihar at 4.7% and the highest in Telangana at 10%. Such noise is noteworthy as it shows how prices range – driven by food products mainly and general cost of living,” he said in a statement.

Indicating supply chain problems, prices rose the most in peripheral states such as J&K and Ladakh, Arunachal Pradesh, Lakshadweep and Sikkim.

This diverse inflation effect can also be explained by the food basket prices. While the prices of food in general rose by 7.7%, the game changer was vegetables – the prices of which grew by 17.4% as compared to last year.

Vegetable oils too remained pricey and the prices of eggs and fish too increased on a monthly basis too — the latter being locally sourced and subjected to greater variations across states.

June’s vegetable prices also rose from May, when they were already high – going up by over 4%. The prices of poultry too were high as they rose by over 5% from last month, thanks to an increase in fodder prices and other costs.

Tomato prices correct and July food prices could ease
On a national level though, fruit prices reduced marginally as the mango season ended and even pulses too reduced marginally on a monthly basis, while cereals rose marginally. These prices will remain sensitive to seasonal behaviour in the near-term, says Nomura.

“Cumulatively, food ex-vegetable prices have risen by 5.4% in 2022 thus far, higher than historical levels, and only somewhat shy of the levels seen in 2020, when food prices spiked owing to the first wave of pandemic restrictions,” said a report by Nomura on inflation, named ‘Stable headline inflation, sticky core’.

However, they all show signs of cooling down in July even though typically, monsoon months see a sharp month-on-month surge in vegetable prices.

“However, in the first 11 days of July, vegetable prices were tracking -0.8% m-o-m, driven by a sharp correction in tomato prices. The prices of sugar, milk, tea, pulses, and vegetable oils have also fallen thus far in July, with the government directing trade bodies to reduce retail edible oil prices in wake of the fall in global prices,” said a report by Nomura.

Along with food, prices of all other miscellaneous categories -- clothing, footwear, education, housing, health products also remained high. Inflation of fuel and light too remained very high at 10.4%.

“The miscellaneous category also witnessed high inflation of 6.3% with household goods, transport and recreation being 7% plus. This is typically the category of goods and services which drives non-discretionary consumption which will be under pressure if inflation persists,” said Sabnavis.

SEE ALSO: OYO rolls out a discount for Mumbai’s stranded commuters as the city stays on orange alert till July 14
From a small thela to 100 stores — MBA Chai Wala is now looking to hire 500 people for 100 more