Consumer Price Index (CPI) August 2019

  Jun 05, 2020

Consumer Price Index (CPI) August 2019

How did the inflation numbers fare in August 2019?

Led by higher food prices, retail inflation rose to 3.21 percent in August, according to data released by the Central Statistics Office (CSO)

Was there a difference between rural and urban inflation on CPI?

Yes. In fact, the difference between rural and urban food prices has widened to the highest since the use of the revised series on base year 2012. 

Urban food prices rose by 7.07 percent in August, while food prices in rural areas rose by only 0.85 percent- a divergence of 6.2 percent.

What are the details about the food inflation divergence?

For fruits, the divergence between price growth in rural and urban areas widened to nearly 11 percentage points in August. 

For pulses, growth rates in rural and urban areas differed by 10.5 percentage points in August while the difference was steepest in prices of vegetables which diverged by 20.5 percentage points in both indices.

 Prices of vegetables in rural areas continued to contract albeit at a declining pace while prices in urban areas continued to show a steep rise in prices. Inflation in rural areas for vegetables contracted by 0.13 percent in rural areas, while they rose by 20.5 percent in urban areas.

What about the services inflation?

Prices of important services like healthcare and education have inched up sharper for rural India. For instance, the rural index for healthcare costs spiked from 139.4 in August 2018 to 152.7 in August 2019, recording a 9.54 per cent inflation. While the same in the urban basket inched up only by 4.9 per cent over August 2018.

What explains the difference?

The above factors have contributed to rising divergence between both indices.

What is the significance?