‘Gold, Coconut Oil’ Fuel Kerala’s Over 9 Percent Inflation in August

Rising gold and coconut oil prices are seen to be the reason behind Kerala’s over 9 percent inflation in August, reports the Times of India on September 15.  Latest data from the National Statistics Office (NSO) showed Kerala had the highest inflation rate among 22 states and Union territories for which numbers were released. It topped the table with rate of over 9 percent, while Karnataka and Jammu and Kashmir were a distant second with 3.8 percent and flood-affected Punjab recorded 3.5 percent.

“The Kerala case is clearly the most interesting outlier.  The rural-urban breakup of inflation in the state shows that the rural inflation is at 10.1 percent and the urban inflation is 7.2 percent,” said Soumya Kanti Ghosh, group chief economist adviser at SBI.

 He said the driving factor is the oils and fats component, which is common for the entire combined consumer price index, and adds that in case of Kerala the steep rise in coconut oil prices has driven the trend and local preference has dominated index momentum coupled with impact of changing climate on coconut production, which is absorbed within the state.  Another factor is the personal care of CPI for Kerala is higher than other states, which includes gold prices.