The Reserve Bank of India (RBI) has released a new working paper addressing critical state-level inflation data gaps that emerged during the Covid-19 pandemic. The paper, titled Data Gaps in State-Level Inflation: An Assessment for the Covid Period, is co-authored by Purnima Shaw and R. K. Sinha.
Why State-Level Inflation Data Went Missing
The Covid-19 pandemic severely disrupted the collection of official statistics across India. As a result, authorities released only imputed price indices at the aggregate level for April and May 2020. However, state-wise official inflation figures remain unavailable for four specific pandemic months — April and May 2020, and April and May 2021. This left a significant gap in India’s inflation time-series data.
How RBI Estimated State-Level Inflation Data
To fill these gaps, the paper uses granular data from the RBI’s Inflation Expectations Survey of Households (IESH). Notably, the IESH continued to run bimonthly even during the pandemic. The researchers used centre-wise urban consumers’ inflation perceptions, three-month-ahead expectations, and past realised CPI-U figures to derive state-wise estimates. These estimated figures, when aggregated, closely match the all-India official CPI inflation series.
Additionally, the methodology highlights the IESH’s resilience and value as a data source during periods of disruption. Therefore, it demonstrates how survey-based tools can effectively supplement official statistics when traditional data collection breaks down.
What This Means for Researchers and Policymakers
State-level inflation data plays a vital role under India’s current inflation targeting framework. Meanwhile, the absence of official figures for these four months has limited research using state-level inflation time series. This paper, therefore, provides a practical solution for economists and policymakers who need complete datasets for regional analysis.
For example, future studies on monetary policy transmission across states can now incorporate these estimated figures with greater confidence. The RBI introduced its Working Paper Series in March 2011 to share research in progress and encourage academic debate. The views in this paper belong to the authors and do not necessarily reflect the RBI’s official position.
Read the full working paper on the RBI’s official website.
Source: RBI Press Releases
