The Reserve Bank of India published a working paper today presenting state-level inflation estimates for April and May of 2020 and 2021, months during which official data was unavailable due to Covid-19 disruptions. The paper, co-authored by Purnima Shaw and R. K. Sinha, uses granular data from RBI’s Inflation Expectations Survey of Households (IESH) to fill these gaps, providing crucial insights into inflation trends during the pandemic period, according to rbi.org.in.
The paper outlines how the RBI leveraged the bimonthly IESH data, which continued uninterrupted during the pandemic, to estimate state-wise Consumer Price Index for Urban (CPI-U) inflation. By analyzing urban consumers’ inflation perceptions, three-month ahead inflation expectations, and past realized CPI-U figures at the state level, the authors derived inflation estimates for the four missing months. These estimates, when aggregated, closely match the all-India official CPI inflation series, confirming the methodology’s reliability, the RBI document states.
State-wise inflation data is vital under India’s inflation targeting framework, enabling more precise monetary policy decisions tailored to regional economic conditions. The absence of official state-level inflation figures during key pandemic months had posed challenges for policymakers and analysts. This RBI working paper addresses that gap, providing a methodological approach to estimate inflation at a sub-national level during periods of data disruption. Such granular data supports better understanding of inflation dynamics across diverse Indian states.
The RBI Working Paper No. 01/2026 titled “Data Gaps in State-Level Inflation: An Assessment for the Covid Period” is now available on the RBI website, offering detailed methodology and findings. This publication marks a significant step in enhancing inflation data transparency at the state level during extraordinary circumstances, according to rbi.org.in.