New Delhi [India], March 23 (HBTV): India's inflation dropped to 3.6% in February, but several states experienced higher inflation levels. According to an SBI research report, Kerala recorded the highest inflation rate among states at 7.3% in February, followed by Chhattisgarh at 4.9%.

The overall inflation trends continue to highlight the divergence between rural and urban inflation, with rural areas witnessing a sharper rise in prices. This disparity is largely attributed to the higher weightage of food prices in the Consumer Price Index (CPI). Food items constitute 54.2% of the rural consumption basket, compared to 36.3% in urban areas.

Among major states, nine recorded rural inflation higher than the all-India rural inflation rate, while eight states saw urban inflation exceeding the national urban inflation rate.

The report noted that Tamil Nadu has recorded inflation higher than the all-India inflation rate in nine of the last 13 years. In contrast, Gujarat and Punjab have managed to keep their inflation rates below the national average in nine of the last 13 years.

Despite the all-India inflation rate cooling to a seven-month low of 3.6% in February 2025, inflationary trends among states remain divergent. However, inflation across states appears to be stabilizing within a 3-6% range, a significant improvement from the 6-12% levels recorded in FY14.

A region-wise analysis from FY12 to February 2025 indicates that the Southern region recorded the highest compounded annual growth rate (CAGR) inflation of 6.0%, followed by the Eastern region at 5.8%. The Southern region also registered the highest inflation in both rural (6.1%) and urban (6.0%) areas.

CPI inflation is expected to decline to 3.9% in Q4 FY25, averaging 4.7% for the fiscal year. Based on current projections, inflation is likely to moderate further to 4.0-4.2% in FY26, while core inflation is expected to remain between 4.2% and 4.4%.

Given the benign inflation trend, a cumulative rate cut of at least 75 basis points is anticipated, with successive rate cuts expected in April and August 2025. If inflation remains under control, further rate cuts could be introduced from October 2025 onwards, providing relief to consumers and businesses alike.

(ANI)