What Is Driving Rural Inflation at a Higher Rate?

Consumer price infl ation in rural areas has been persisting at a higher rate than that in urban areas and the gap between the two has stood at 1.5 percentage points in May 2016. Infl ation of both series slowed considerably during the last two years or so, the moderation in rural areas has been slower than in urban areas. This was partly due to compositional differences accompanied by divergent price movements and partly due to higher marketing costs and trade margins resulting from the prevailing rural-urban divide in terms of infrastructure bottlenecks, inadequate logistics support, etc.