As per the latest data released on Tuesday, consumer price inflation (CPI) figures for February revealed a mixed picture across various Indian states, with disparities evident in retail inflation rates compared to the national average.
Out of the 22 states tracked, a significant portion, totaling 12 states, reported retail inflation rates higher than the national average of 5.09% for February. Notably, states such as Andhra Pradesh, Assam, Gujarat, Haryana, Jharkhand, Karnataka, Odisha, and Rajasthan witnessed higher retail inflation rates compared to the overall national average.
February saw Odisha topping the list with the highest retail inflation rate of 7.55%, while Delhi recorded the lowest at 2.42%, showcasing a wide spectrum of inflationary pressures across the country.
Economists attribute the prevailing inflationary trend primarily to food inflation, which continues to exert pressure on overall inflation figures. Madan Sabnavis, chief economist at Bank of Baroda, highlighted that rural inflation stood at 5.3%, slightly higher than the urban rate of 4.8%, largely due to the significant weightage of food products in the inflation index.
The headline retail inflation figure for February remained nearly unchanged from January, standing at 5.09%. However, consumer food price inflation witnessed a slight uptick, reaching 8.66% in February, compared to 8.3% in January and 5.95% in February 2023.
Within the food and beverages category, inflation surged to 7.76% last month, with vegetable prices soaring the highest at 30.25%. Other commodities such as cereals, eggs, sugar, spices, and pulses also contributed to the inflationary pressures.
While some analysts anticipate a potential easing of inflation to below 5% in March, led by lower core inflation, the persistent high food inflation poses challenges to achieving substantial relief.
Aditi Nayar, Chief Economist at ICRA, projected a dip in headline CPI inflation to below 5% in March, primarily attributed to reductions in fuel and light prices. However, she cautioned that food inflation is likely to remain elevated above 7%.
Core-CPI, which excludes food and beverages, fuel and light, and petrol and diesel, witnessed a marginal decline to 3.5% in February 2024, the lowest reading since January 2015.
Rajani Sinha, chief economist at CareEdge Ratings, highlighted the ongoing inflationary pressures in specific food categories like cereals, pulses, spices, and vegetables. She emphasized the risk of broadening price pressures and inflationary expectations. However, Sinha noted a slightly improved outlook for food inflation, attributed to increased overall acreage in rabi sowing compared to the previous year.
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