Demonetisation possible reason for high inflation in Delhi, J&K: Assocham

CPI inflation in Delhi was 6.32%; it was 7% in Jammu and Kashmir

The retail inflation may have been hovering at quite a reasonable level of 3.17 per cent for January on an all-India basis, but there is no respite for people right in Delhi along with a couple of other states, suffering the price rise at double the national average, with demonetisation leaving its possible impact, an Assocham analysis has noted.

"Against the national average of 3.17 per cent, Delhi had to bear the inflation rate, measured by the Consumer Price Index (CPI) at 6.32 percent, while it was 7.01 per cent for Jammu and Kashmir (J&K) and 5.92 per cent for Himachal Pradesh," said the Assocham analysis of the inflation data.

It also noted that in the rural belt of the national capital, the CPI inflation was close to seven per cent at 6.85 percent. Similarly rural areas of Jammu and Kashmir and Himachal Pradesh, which were quite high on the retail inflation chart, witnessed quite a high rate of price rise in January on a year-on-year basis.

In J& K rural and far flung, the CPI inflation was 9.08 percent and for the similar areas of Himachal Pradesh it was 6.17 percent, adds the Assocahm.

"The CPI inflation for January on an all India level is much lower at 3.17 percent than the one measured on the wholesale price index (WPI) at 5.25 percent. One of the plausible reasons could be the impact of demonetisation on the supply chain," said Assocham President Sandeep Jajodia.

But, what is even more surprising is the huge gap between retail inflation in Delhi and the national average.

"This was not expected at least in Delhi, especially when the phenomenon was not seen even in the neighbouring states of Haryana, UP and Punjab, thought it was slightly over four per cent in these states," the chamber said, adding the demonetization would have led to supply chain disruption more in the national capital than other states.

In any case, there are several supply chain issues which can be fixed only by an efficient transport that is a function of a huge investment needed in building quality roads, rail network, air cargo and a well integrated and modern cargo movement trade, said Jajodia.