Inflation remains soft even in states with high consumer spending power

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Updated: May 20, 2019 8:32:40 PM

Inflation continues to be benign, and while the low consumer spending power in some states is to blame for it, the price rise is modest even in some states with higher income levels. CPI inflation in India was at a modest 2.92% in April.

MPC framework, CPI inflation, MPC, inflation index, monetary policy, monetary policy frameworkInflation remains soft even in states with high per capita income, says ASSOCHAM report

Inflation continues to be benign, and while the low consumer spending power in some states is to blame for it, the price rise is modest even in some states with higher income levels. CPI inflation in India was at a modest 2.92% in April; however, it ranged widely between (-) 0.72 to 5.21 percent across states. The low inflation in April at 2.92 percent can be attributed to less spending power in most of the states, when at the same time, some states with high per capita income also have benign inflation, an analysis by ASSOCHAM revealed.

While some states witnessed low scale of inflation in spite of their per capita income being more than the national per capita income, some have as high as 5.21 percent of inflation, according to a report. In some states, inflation is low on account of lower level of consumer spending power and demand, but the same reasoning doesn’t hold true for other states as they have also seen less inflation despite their high per capita income.

According to the ASSOCHAM report, while Bihar has low inflation owing to its lower level of consumer spending, states like Maharashtra, Gujarat, Haryana and Andhra Pradesh which boast about their high per capita income have also less inflation, less than the national inflation of 2.92 percent in April.

Conversely, hilly states which have difficult transport terrain also registered lower of negative inflation as compared with those states which are widely networked and have a better transport system.

While, hilly state like Himachal Pradesh, where transport infrastructure is not as good as those in plain, witnessed negative inflation of (0.72) percent, Karnataka which is among one of the highly developed states in terms of infrastructure saw a high retail inflation of 5.21 percent.

“In fact, the comparison between HP and Punjab is stark. While Himachal with difficult transport terrain has witnessed negative inflation, Punjab at the foothills was among the states with higher inflation. It registered 3.45 per cent rise in CPI for April, 2019,’ the report said.

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