Bihar inflation remains subdued as elections approach

Inflation in Bihar edges down before elections

Bihar, which only a year ago was grappling with the fastest inflation among India’s larger states, has now swung to the opposite end of the spectrum. The state, heading into elections in November, recorded inflation of just 0.5 percent in August, far slower than the national average of 2.07 percent.

Trajectory reversal

The reversal is striking. Bihar topped the charts with 7.8 percent inflation in October, and as recently as the quarter ended September 30, 2024, it led all states in price rises. By the first two months of Q3 2025, however, Bihar slipped to the 16th position, with inflation at just 0.2 percent.

The Bihar story

For Bihar, the turnaround highlights how food dynamics shape its inflation story. Last year’s spike was linked to erratic rainfall and supply bottlenecks; this year’s benign monsoon and improved distribution have helped cool prices. 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.

Food inflation remained negative for a third consecutive month in July at -0.69 percent, compared with -1.76 percent the previous month, according to data released by the government on September 15.

An earlier analysis by Moneycontrol had found that cereal inflation fell to a 44-month low of 2.7 percent in August. Vegetables and pulses remained in deflation at 15.9 percent and 14.5 percent, respectively, versus 20.7 percent and 13.8 percent in July.

GST impact

Looking ahead, experts indicate that prices could ease further as GST rate rationalisation from October cuts taxes on items like butter, ghee, namkeen and bakery goods, potentially offering additional relief to households ahead of elections.

A Moneycontrol analysis found that 14 percent of the inflation basket is expected to witness a softening of prices owing to the GST cuts effective from September 22. The impact could range from 0.2 percentage points to a percentage point ​, depending on the pass-through of cuts to consumers.