## Inflation Rates Vary Across Indian States
While the national inflation rate provides a general overview, it masks significant variations across individual states. A closer look at state-wise inflation figures reveals that several states experienced higher inflation than the all-India average during the financial year 2023-24 (FY24).
States with Consistently High Inflation
Persistent high food inflation: Food inflation has been a major driver of overall inflation, particularly impacting states that rely on imports for essential food items.
The varying weightage assigned to rural and urban indices in different states influences their inflation rates. States with a higher rural population tend to experience higher inflation due to the greater impact of food prices.
Other States with High Inflation
Several other states, including Manipur, Uttar Pradesh, Gujarat, Odisha, Karnataka, Tripura, Bihar, Punjab, and Andhra Pradesh, also experienced higher inflation rates for a significant portion of FY24.
States with Lower Inflation Rates
In contrast, seven states and union territories, including Delhi, Goa, Sikkim, Nagaland, Chandigarh, West Bengal, and Jammu and Kashmir, consistently enjoyed lower inflation rates than the national average throughout FY24.
Factors Influencing State-Level Inflation
Food production: States that are major producers of food items tend to experience lower inflation due to lower food prices.
States with a higher rural population tend to have higher inflation due to the greater impact of food prices.
States with higher taxes on fuel, such as Rajasthan, tend to experience higher inflation due to the spillover effect on other commodities.
Events like the violence in Manipur can also contribute to higher inflation in specific states.
Outlook for FY25
The Reserve Bank of India (RBI) expects retail inflation to be around 4.5% in FY25. However, several factors could influence inflation rates, including the distribution of monsoon rainfall, potential increases in crude oil prices, and government spending in the lead-up to the general elections.