Villages hit harder by rising prices

indexSource: Business Standard, Sept 19, 2016

New Delhi: Consumer Price Index (CPI)-based inflation moderated across states in August, compared to July. However, rural Gujarat’s was still elevated, though no longer in double digits and down from the previous month, at close to nine per cent, from 10.14 per cent in July.

Inflation in Gujarat has never been below eight per cent this financial year (from April 1) and below seven per cent in the current calendar year till August. The difference between the national average of rural CPI inflation and in Gujarat widened in July and August.

The national average in January was 6.48 per cent and in August was 5.87 per cent. Rural Gujarat’s was 7.71 per cent and almost nine per cent, respectively. In July, the national average of inflation in villages was 6.66 per cent.

Odisha was another state where rural areas saw double-digit inflation in July. But, it fell sharply to 7.07 per cent in August, from about 10 per cent in July, according to figures released for 22 states by the ministry of statistics and programme implementation.

Inflation in rural Rajasthan was 7.09 per cent in August , higher than Odisha’s. It was 7.56 per cent in July.

Other states where rural areas saw higher inflation than the national average in August were Maharashtra (6.85), Andhra (6.71), Uttar Pradesh (6.43), Jammu & Kashmir  (6.4, Haryana (6.21), Punjab (6.07),  Jharkhand (6.02) and West Bengal (5.98).

Overall CPI inflation, covering urban and rural parts, fell across states in August from July. Overall inflation was the highest in Rajasthan at 6.69 per cent in August, whereas it was so in Odisha at 8.63 per cent in July. In urban areas, the rate in August was 4.42 per cent.

In July, the urban rise was 5.39 per cent, also less than what was faced in  villages.

Inflation has been higher in rural areas than urban parts for five years, says a CRISIL study. “The gap has remained 100 basis points in the recent past, caused by higher core and fuel inflation in the rural areas,” the rating agency had said.

However, inflation in urban and rural parts has generally moved together, with some exception. For instance, June saw inflation in urban areas rising to 5.26 per cent from 4.89 per cent in May, while it fell to 6.2 per cent from 6.45 per cent in villages.

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