Inflation Trends in India 2025: A State-by-State Analysis

Inflation in India is a significant issue—it influences the costs of everything, from groceries to clothing. In 2025, the inflation rate in India is developing differently across its 28 states and 8 union territories (UTs).

Certain regions are experiencing rapid price increases, while others remain stable. This blog explores the inflation rate in India for 2025, emphasizing the variations from state to state.

We will examine the retail inflation rate in India, identify the areas with the highest and lowest inflation, and present a clear overview using straightforward language. Let us break it down!

What Is Inflation?

Inflation refers to the rise in prices over time, which means your money has less purchasing power.

The CPI inflation rate in India (Consumer Price Index) tracks the changes in prices for everyday items such as food, fuel, and clothing. As of June 2025, India’s national CPI inflation rate stands at 2.10%, which is relatively low compared to the inflation rate in India over the past decade, where it averaged around 5-6% (reaching a peak of 6.07% in 2022, according to RBI data).

However, not every state experiences the same level of impact—some are affected more severely than others.

Inflation rates in every Indian State

Top 5 States with the Highest Inflation Rates in 2025

Here’s an overview of the five states and Union Territories (UTs) exhibiting the highest inflation rates in India for the year 2025, according to the most recent data:

Manipur (9.69%): The inflation in Manipur is significantly high, likely attributed to its remote geographical location and challenges in the supply chain. The difficulty in transporting goods to this North Eastern state contributes to increased costs.

Chhattisgarh (8.90%) The elevated inflation rate in this state may be linked to its dependence on agriculture and mining sectors, where both fuel and labor expenses are on the rise.

Bihar (7.90%) Bihar’s substantial population and predominantly rural economy result in a heightened demand for goods, causing prices to escalate more rapidly than the national average.

Odisha (7.51%) The inflation in Odisha is influenced by comparable factors—rural demand and supply difficulties, particularly concerning food and essential items.

Dadra and Nagar Haveli and Daman and Diu (7.28%): Despite its small size, this UT is not exempt from high inflation, potentially due to its industrial sector and the costs associated with imports.

Manipur’s inflation rate of 9.69% is significantly higher than the national average of 2.10%, illustrating the disparities in inflation across India. Such elevated rates complicate daily life for residents, as the prices of everyday goods continue to rise.

Lowest Inflation States and UTs

Conversely, there are regions that are managing to maintain low inflation rates or even zero (though this may oversimplify areas with incomplete data). Below are the five states and UTs with the lowest inflation rates:

1. Chandigarh: 0.00%
2. Ladakh: 0.00%
3. Andaman and Nicobar Islands: 2.00%
4. Lakshadweep: 2.00%
5. Sikkim: 3.90%

Chandigarh and Ladakh report a 0% inflation rate due to insufficient data; however, it is likely that they experience some level of inflation (for instance, Chandigarh recorded 9.4% in 2019-20).

The Andaman and Nicobar Islands and Lakshadweep enjoy stable prices, possibly owing to their small populations and dependence on government-subsidized goods. Sikkim’s low inflation rate is indicative of its stable economy and focus on tourism.

How Does 2025 Compare to Previous Years?

Reflecting on the past, the inflation rate in India for 2021 was notably higher, with a national Consumer Price Index (CPI) rate of 5.56% as reported by the Reserve Bank of India (RBI). Food prices significantly contributed to this, particularly for vegetables and oils.

Over the last decade, inflation rates in India have varied, reaching a peak of 6.8% in 2013 and a low of 3.4% in 2019. The projected national rate for 2025, at 2.10%, is among the lowest seen in ten years, attributed to stable food prices and government measures such as adjustments in RBI’s interest rates.

Nevertheless, certain states like Manipur and Chhattisgarh stand out as exceptions, exhibiting inflation rates reminiscent of the higher inflation periods of the past. For those interested in historical trends, an inflation calculator for India (available on RBI or other financial websites) can illustrate how prices have evolved since 2015.

Why Do Inflation Rates Differ?

Inflation rates vary across states due to several factors:

Supply Chains: Remote regions such as Manipur or Arunachal Pradesh encounter elevated transportation costs, which in turn increase prices.

Economy Type: Industrialized states like Gujarat (6.00%) experience different cost pressures compared to agricultural states like Bihar (7.90%).

Demand: Densely populated states such as Uttar Pradesh (7.20%) experience greater demand for goods, potentially driving inflation higher.

Local Policies: Certain Union Territories (UTs) like Andaman and Nicobar benefit from subsidized goods, which helps maintain lower inflation rates.

For further insights into the mechanics of inflation, consider exploring the inflation in India Wikipedia page for a comprehensive overview of historical trends and policies.

What Lies Ahead?

Forecasting India’s inflation rate for the next two decades presents challenges. Economists anticipate that inflation will stabilize around 4-5% annually, provided global factors such as oil prices remain consistent.

However, states currently experiencing high inflation, like Manipur, may continue to face difficulties unless there are improvements in infrastructure. Conversely, regions with low inflation, such as Lakshadweep, could experience increases if tourism or shipping costs rise.

Source

• Major State-wise YoY Inflation rate (in %) as per CPI till January 2025