Rising rural consumption fuels inflation spike in Telangana

Hyderabad: After more than a year of subdued price rise, Telangana recorded the highest inflation in the country in February, signalling a sharp shift from the low or near-deflationary trend seen in recent months. Data showed retail inflation in the state touching 5.02%, with rural areas witnessing a steeper rise than urban centres.Inflation in rural Telangana stood at 5.40%, significantly higher than the 4.73% recorded in urban areas, highlighting growing price pressures in the countryside. Economists attribute the spike largely to rising consumption in rural regions, driven by increased wages and the circulation of money through govt welfare schemes. Neighbouring Andhra Pradesh reported the second highest inflation rate at 5.02%, with rural inflation at 5.04% and urban inflation at 3.04%. According to the Reserve Bank of India, a healthy inflation band should remain between 2% and 6%, which is 2 percentage points below and above its target of 4%. Telangana's latest figures place the state close to the upper end of this recommended range. Explaining the rural inflation trend, economist A Nakula Reddy said, "One significant factor contributing to this trend may be that consumption levels in rural communities reached parity with those in urban areas. This change can be attributed to several key elements, including an increase in wages for rural workers and the govt's proactive financial support through various welfare schemes. This newfound financial capacity is driving an uptick in consumption, leading to the observed inflationary pressures." Another factor pushing up prices, particularly of fruits and vegetables, is Telangana's limited agricultural production. The state produces only about 27% of the vegetables and fruits required for its population, forcing it to depend heavily on supplies from neighbouring states. The long transportation routes from other states to Hyderabad—the main distribution hub—add to logistical costs. These higher transport and handling expenses are ultimately passed on to consumers, resulting in increased retail prices in both urban and rural markets across the state.