11 states record retail price inflation rate of over 6% in November

Eleven of the 36 states and union territories recorded a retail price inflation rate over 6 per cent in November, thanks largely to food price inflation, which touched the double digit mark nationally for the first time in the previous calendar year.

The states that witnessed high consumer price index (CPI)-based inflation rates were Lakshadweep, Tripura, Odisha, Uttar Pradesh, Kerala, Madhya Pradesh, Puducherry, Tamil Nadu, Rajasthan, Manipur and Mizoram.

Odisha recorded the highest increase in inflation in November as the rate rose to 7.23 per cent in November against 3.35 per cent in the previous month, a rise of about four percentage points.

This happened because rural areas in the state saw substantial rise in inflation rate to 7.37 per cent in November, up from 2.61 per cent the previous month, or an increase of 4.76 percentage points. Urban areas, too, witnessed a surge, albeit at a lower rate of 1.54 percentage points, as inflation rose to 6.86 per cent from 5.32 per cent, the previous month.

This was mainly because of the food inflation rate, which, along with beverages, saw a double digit rate of rise in November from 4.23 per cent in October to 10.65 per cent in November. In fact, food and beverages inflation rose close to double digits in the rural areas of Odisha. It rose from 2.89 per cent in October to 9.97 per cent in November, an increase of more than seven percentage points in a span of one month. Meanwhile, the inflation rate in urban areas stood at double digits of 13.09 per cent in November from 9.69 per cent in the previous month. This also was a rise of more than three percentage points.

A surge in the inflation rate in Odisha can also be gauged from the fact that the state saw no inflation in the month of January this calendar year (see table). In fact, it was quite moderate till September, hovering between zero and 2.21 per cent.

The inflation rate in Odisha was, however, lower than Lakshadweep, Tripura and Manipur. 

Lakshadweep recorded the highest inflation rate among all the states – the only one that saw double-digit inflation – recording a rate of 10.25 per cent in November, up from 7.76 per cent the previous month. To be sure, inflation had been on the rise in the union territory since May, when it had crossed the 6 per cent mark. 

Tripura saw an inflation rate of 7.54 in November, up over a percentage from October. Here, too, the inflation rate had hovered close to or above the 6 per cent mark from July.

Among the 11 states under consideration, only Manipur saw a marginal dip in the inflation rate. It recorded a rate of 7.9 per cent in November, down from 8.01 per cent the previous month.

The inflation rate in most states was driven by food items, even though the decline in food inflation in Manipur led to a fall in the overall rate of price rise in Manipur. Even then, food inflation in the state stood at 10.96 per cent in November, against 12.27 per cent in October.

At the national level, food inflation touched 10.01 per cent in November, up from 7.89 per cent in October, driven by vegetables prices, and onions in particular. However, food inflation in urban areas had already breached the double-digit mark in October, when it was 10.47 per cent. This rate rose to 12.26 per cent in November. In rural areas, however, food inflation was still in single digits at 8.83 per cent in November, though it rose from 6.42 per cent recorded in October.

“Food inflation will remain relatively elevated in December. As vegetable prices normalise, food inflation should decline substantially in January 2020, but remain between 4-5 per cent in the first half of the calendar year 2020,” said Aditi Nayar, principal economist at ICRA.

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