'Gold, coconut oil' fuel Kerala's over 9% inflation in Aug

NEW DELHI: Inflation has largely remained benign across states and overall, but Kerala continues to top the charts with the highest retail inflation rate in Aug. Rising gold and coconut oil prices are seen to be the reason behind the spurt. 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 a rate of over 9%, while Karnataka and Jammu and Kashmir were a distant second with 3.8% and flood-affected Punjab recorded 3.5%.

"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% and the urban inflation at 7.2%," said Soumya Kanti Ghosh, group chief economic 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 weight of personal care in CPI for Kerala is higher than other states, which includes gold prices that have also contributed to the build-up in state level CPI in Kerala," said Ghosh.