Last year, inflation in rural areas remained lower than in urban areas: Economic Survey

Last year, inflation in rural areas was lower compared to urban areas, resulting in lower economic pressure in rural areas. In the last two years, i.e., 2023 and 2024, rural inflation was higher than urban inflation, but in 2025, it decreased due to the decline in food prices.
Finance Minister Nirmala Sitharaman provided this information in the Economic Survey 2025-26 presented in Parliament. The survey indicates that in most states, retail inflation remained within the Reserve Bank of India's tolerable range of 2-6 percent. During this period, only in Kerala and Lakshadweep did retail inflation exceed 6 percent. In states like Delhi and Himachal Pradesh, inflation was lower than the national average, while in southern and northeastern states, average inflation was recorded.
The survey also analyzed the Consumer Price Index (CPI) inflation data by state. Based on monthly data from January 2014 to December 2025, it was found that the difference in inflation among states was not entirely transitory. Sometimes, the situation different from the national average persisted for more than a month. In southern and northeastern states, inflation consistently remained above the national average, while in states like Delhi and Himachal Pradesh, inflation often remained below the national average.
The survey reveals that in states where the wage rate is higher than the national average, inflation is also higher. Furthermore, the share of industrial production had an inverse effect on inflation, i.e., the performance of the manufacturing sector reduced price pressure. The survey found that the implementation of GST had no significant impact on the difference in inflation among states.