'Inflation in Karnataka, south higher in last 5 years'

Contrary to the perception that southern states are more prosperous than their northern counterparts, a study revealed that almost all south Indian states, including Karnataka, reported higher average inflation compared to the rest of the country consistently from 2013 to 2018.

Not only that, the study by Reserve Bank of India and the Ministry of Statistics also showed that the southern states have the highest level of fluctuation in prices of goods and services.

The average inflation of southern states was close to 7% between 2013 and 2018, the study showed.

The southern states combined have a weight of nearly 25% in the all-India inflation index.

Since the all-India consumer price index (CPI) is compiled as a weighted average of the state-level price indices, a relative price movement in these states is expected to impact national level inflation in a greater way.

The RBI tracks consumer price index for making monetary policy decisions.

According to the study, the all-India headline inflation or WPI was impacted largely by the movements in food inflation.

In fact, the sharp moderation in inflation during 2017-18 can be largely attributed to food inflation, with its contribution to overall inflation falling below 30% from an average of 52% in the previous five years since 2013.

Other major contributors to headline inflation all these years were petroleum products and housing rentals.

Food inflation also exhibited the highest volatility or fluctuation which, in turn, was transmitted to overall inflation, given the large weight of food (45.9%) in the all-India consumer price inflation.

The data incorporated in the study showed that inflation targeting by RBI helped consumer inflation come down from 11.5% in November 2013 to an average level of 3.6% in 2017-18.

It showed all the southern states had higher average inflation than northern states like Punjab, Haryana, Uttar Pradesh and Uttarakhand as well as states in other regions like Maharashtra and Madhya Pradesh. But Bihar recorded the highest inflation of 16.1% in November 2013, while Chhattisgarh recorded the lowest inflation level of (-) 2.3% in June 2017.