Retail inflation at 5.54 percent in September, the highest in almost two years, marks the fourth consecutive month that headline CPI has stayed above the Reserve Bank of India’s 4 percent target.
The rise has been driven by a sharp increase in food, fuel and transport costs, compounded by a depreciating rupee and global crude price pressure since the US-Israeli war on Iran.
The impact has been particularly severe for rural India. Rural inflation touched 6.08 percent against 4.88 percey in urban areas.
Rural food inflation rose almost two percentage points between August and September to 8.06 percent. Onion prices recorded 108.09 percent year-on-year inflation, garlic 54.62 percent and ginger 62.85 percent, even as potato at -11.50 percent and tomato at -8.62 percent provided some relief.
Restaurant and accommodation services rose 9.36 percent and personal care and miscellaneous goods 13.75 percent.
The festive season will therefore be expensive for rural households already dealing with deficient monsoon, El Nino risks to harvests and incomes, and high temperatures.
With headline CPI just 0.46 percentage points below RBI’s upper tolerance limit of 6 percent, the Monetary Policy Committee raised repo rate by 25 basis points to 5.50 percent in October, ending pause since February 2023. Another hike in December cannot be ruled out if pressures broaden.
Against this national surge, Meghalaya offers a contrasting picture. The state recorded the fifth-lowest inflation in the country at 3.59 percent% in September, well below the national average of 5.54 percent, according to provisional CPI data released by the Ministry of Statistics and Programme Implementation on October 12.
Only two states, Mizoram at 2.85 percent and Nagaland at 3.22 percent, and Delhi at 3.40 percent, had lower inflation.
Meghalaya’s rural inflation stood at 3.72 percent while urban inflation was 3.22 percent, with overall CPI at 107.69.
For Meghalaya, this means relatively moderate price pressure compared to states like Tamil Nadu at 6.81 percent which was highest in country. Households in Shillong and rural districts have seen slower rise in cost of basket of goods and services.
However, the low rate does not mean prices have fallen, only that they rose slower than national average. National food inflation at 7.74 percent still spills over into local markets through supply chains, transport costs and wholesale prices which rose to 11.39 percent in September.
Local prices in Meghalaya can vary depending on supply, transport and market conditions, and rural households still faced slightly higher inflation than urban ones.
The repo rate, a blunt instrument, is set for national conditions and will remain tight even though Meghalaya at 3.59 percent does not need such tightening, highlighting wide state-wise divergence within a single currency union.
