Rural India reeling under higher inflation than urban

The inflationary pressure in the economy is impacting rural India more than its urban counterpart. The rural sector is reeling under higher inflationary pressure than urban for months now with both retail inflation and food inflation galloping ahead.

Data from the National Statistical Office (NSO) reveals that consumer price inflation (CPI) has grown at a higher rate in the rural areas compared with the urban areas for seven consecutive months since December last year.

In the month of June, for example, CPI inflation rate (rural) stood at 7.09% while the CPI inflation rate (urban) stood at 6.92%. In the month of May, even though the gap between the headline inflation rates in the rural and urban segments of the economy was not that wide, the former was ahead at 7.08% against 7.01% for the latter.

In the month of April, when inflation hit an eight-year high, it was rural consumer price inflation at 8.38% which jacked up the average as the consumer price inflation in the urban segment of the economy stood at 7.09%. The last time when the retail inflation in the rural areas was lower than the urban areas was in November last year with CPI (rural) at 4.29%, and CPI (urban) at 5.54%.

Interestingly, food price inflation in the rural areas surpassed the urban food inflation in the wake of the Russia-Ukraine war during the February-April period this year. In April this year, food inflation rate (rural) touched 8.5% compared with food inflation rate of 8.09% in the urban areas. In the last two months, though, the food price inflation rate has cooled off more in the rural areas than the urban areas, according to the data from NSO.

According to the NSO data, fruit prices grew at the rate of 4.54% in the rural segment compared with 1.52% in the urban sector in the month of June. The month saw a higher rate of inflation in a number of items like pulses, spices and cereals in the rural areas than the urban areas.