India’s Inflation in June 2024: Odisha Leads with 7.22%, Industrial Production Soars

In June 2024, India’s inflation rates varied across different states, with 12 out of 22 states experiencing inflation above the national average of 5.1%. Odisha had the highest inflation at 7.22%, followed by Bihar at 6.37% and Karnataka at 5.98%. This shows the economic differences between regions as the country deals with rising prices.

At the same time, the Index of Industrial Production (IIP) reached a seven-month high of 5.9% in May, driven by growth in mining (5.9%), manufacturing (4.6%), and electricity production (13.7%).

Urban vs. Rural Inflation

Rural inflation increased to 5.66%, while urban inflation rose to 4.39% in June. The gap is due to higher food prices and a larger share of food items in rural consumption (54.2%) compared to urban areas (36.3%).

Food Prices and Inflation

Food items were the main contributors to inflation in June, with vegetables seeing a 29.32% price increase, pulses rising by 16.07%, and cereals by 8.75%. These increases are mainly due to weather conditions affecting vegetable and protein-based item prices.

Industrial Growth

The IIP rose to 5.9% in May, up from 5.4% in April, driven by increases in mining, manufacturing, and electricity production. For April-May 2024, industrial growth averaged 5.4%, compared to 5.1% in the same period last year.

State-wise Inflation

Odisha had the highest inflation rate at 7.22%, followed by Bihar at 6.37% and Karnataka at 5.98%. Eight states had inflation rates below the national average. Rural inflation was higher than urban inflation in 18 states.

Food Crop Prices

Current market prices for major food crops like maize, arhar, urad, paddy, sesamum, wheat, gram, and masur are higher than the Minimum Support Price (MSP). However, prices for crops like jowar, bajra, ragi, moong, soybean, and cotton are below MSP, indicating a need for government support if prices fall significantly.

Future Inflation Outlook

Inflation in the coming months will depend on domestic factors, especially food prices. CPI inflation is expected to stay around or below 5.0% for the rest of the fiscal year, except for September 2024. For FY25, average CPI inflation is projected to be between 4.6% and 4.7%. The monsoon’s progress, with a slight deficit in Central India, supports this outlook.

Global Influence

The U.S. inflation rate’s slight decline to 3% may lead to a Federal Reserve rate cut by September, potentially influencing the Reserve Bank of India’s policy decisions.