ANALYSIS Bihar’s third-lowest inflation rate is no guarantee of an incumbent’s return to power

Nitish Kumar, Chief Minister of Bihar

The general perception is that inflation plays a key role during elections, particularly in determining whether the incumbent government retains power.

However, an analysis by Moneycontrol shows that lower inflation does not always guarantee a victory for the incumbent while some retained power despite higher price pressures.

Now, poll-bound Bihar has been one of the better-performing states on the inflation front in 2025, with price pressures easing sharply from over 5 percent in January to a deflation of 0.5 percent in September.

On average, Bihar’s inflation rate has remained below 2 percent during January to September 2025, well under the national average of 2.72 percent for the same period.

At –0.51 percent, Bihar’s inflation rate last month was the third lowest among all major states, after Uttar Pradesh and Assam.

This is in line with India's overall retail inflation that eased to 1.54 percent in September, lowest in over eight years.

Given that Bihar is a largely agrarian state, softer food costs have significantly helped lower price pressures in the state. In fact, food inflation in September 2025 came in at a negative of 2.3 percent.

Food accounts for 61 percent of the rural inflation basket and 44 percent in urban areas, compared with the national average of 54 percent and 36 percent.

However, inflation alone is unlikely to be the primary factor determining whether Chief Minister Nitish Kumar, who has led the government in Bihar for about 20 years, retains power.

For instance, in Chhattisgarh, the state’s average inflation rate was less than 3 percent from January to September 2023, ahead of polls in November, which was significantly below the national average. Despite this, the incumbent Congress government lost power to the Bharatiya Janata Party (BJP).

In Delhi too, the ruling Aam Aadmi Party (AAP) lost the February 2025 elections, leading to the BJP’s return to the capital after more than two decades, despite inflation being relatively lower than in many other states in the run-up to the polls.

To be sure, unlike Delhi or Chhattisgarh, in the 2024 polls, the incumbent coalition led by Jharkhand Mukti Morcha (JMM) won the elections in the state retaining power with relatively low inflation compared with the national average in the months leading up to the polls.

And then in poll-bound Gujarat, inflation remained elevated at an average of 7.4 percent, higher than the national rate, during January to September of 2022, yet the incumbent BJP government retained power after the elections in December of that year.

Similarly, Kerala’s Left Democratic Front (LDF) retained power in 2021 despite relatively higher inflation.

Inflation, however, continues to be one of the most talked-about issues ahead of state elections with political parties frequently opting for freebies and subsidies to lure voters in their favour.

In Rajasthan and Telangana, both states with inflation rates higher than the national average, the incumbent governments lost the assembly elections held in 2023.

Issues of price pressures seemingly helped opposition parties like the Indian National Congress (INC) win in Himachal Pradesh and Karnataka, a success many attributed to promises of cash transfers and welfare measures.

In the case of Bihar too, both the BJP-led National Democratic Alliance and the Congress-allied Mahagathbandhan have included a range of welfare schemes and cash transfers in their manifestos, targeting key groups such as farmers, youth, and women.

Voting in Bihar will take place in two phases on November 6 and November 11, while results will be declared on the 14th of the same month.