Inflation persistence continues to plague the economy. The consumer price index for industrial workers (CPI-IW) measures inflation using the consumption basket for industrial workers. The latest series uses 2001 as the base year and provides estimates from 2006. This index compiles estimates for 78 industrial centres of the country selected on the basis of the importance of industrial employment. This series shows that in the last four years, inflation has moved up from an average rate of 6.2 per cent in 2007-08 to more than or close to double-digit levels.

The latest data released for September showed all-India CPI-IW inflation at 10.06 per cent, compared to 10.09 per cent last year there is hardly any let-up in price pressures. In fact, September saw the return of double-digit inflation after eight months. Centres with the highest inflation in September were Bhilai, Bokaro and Jamshedpur at more than 20 per cent, while those with the lowest inflation at three per cent or less were Warangal, Labac-Silchar and Rangapura-Tezpur.

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Each centre has a different weighting depending on consumption patterns among industrial workers. Housing has seen more than 20 per cent year-on-year inflation in both the years, while food items that had double-digit inflation in 2008-09 and 2009-10 moderated slightly in 2010-11. The miscellaneous group – which has the second-highest weight in the index, includes medical care, education, recreation, transport and communication, personal goods and so on – has had a stable five per cent inflation over the last two years. (Click here for chart)

If we look at average inflation state-wise, we find that over the last 12 months for which data are available, Jharkhand stands at the top with 13.1 per cent inflation. Chandigarh and Chhattisgarh follow with more than 12 per cent inflation, while Kerala, Maharashtra and Orissa have had double-digit inflation. Overall inflation has moderated over the past 12 months. At the all-India level, average CPI-IW inflation stood at nine per cent between October 2010 and September 2011, compared to 12.3 per cent in the preceding 12 months.

Kerala is the only state that has seen a rise in inflation from 9.7 per cent to 11.6 per cent over the two periods. Jammu and Kashmir, Jharkhand, Delhi, Chandigarh and Chhattisgarh have seen the least drop in inflation and the three states that have had the steepest fall in price pressures are Uttar Pradesh, Andhra Pradesh and Haryana. Puducherry stands out with the lowest inflation in both the time periods, showing a much more stable environment.

The Central Statistics Office has begun new CPIs for urban and rural areas with an updated base year of 2010, but there is no time series of inflation yet. Meanwhile, though the CPI-IW deals with the consumption basket of just one group of the urban population, it is the only inflation indicator for different items in urban areas across India and it continues to show price pressures.
 

Indian States Development Scorecard, a weekly feature by Indicus Analytics, focuses on the progress in India and across the states across various socio-economic parameters.
sumita@indicus.net  

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