Kerala tops inflation chart again as national average drops to 6-year low

The headline inflation in Kerala remained elevated in June, even as the rest of India saw a sharp decline, with national rates falling to a six-year low. Inflation in Kerala was 6.71 per cent in June, an increase compared to the 6.46 per cent recorded in May.

This increase comes even as India's Consumer Price Index (CPI), the key metric for measuring inflation within the country, fell to 2.10 per cent, the lowest since January 2019, compared to 2.82 per cent in May, according to the data released by the Ministry of Statistics and Programme Implementation on Monday.

This is the sixth consecutive month that Kerala has retained the top spot on the inflation chart. Rural inflation in the state stood at 7.31 per cent in June, while urban inflation was 5.69 per cent, both the highest among all states in the country.

Interestingly, Kerala’s inflation rate has remained relatively steady since February, when it recorded 7.31 per cent. It dipped to 6.59 per cent in March, further to 5.94 per cent in April, before rising again to 6.46 per cent in May.

Primarily a consumer-driven state with nearly 80 per cent of goods imported, Kerala’s lifestyle and evolving consumption patterns are contributing to its persistently high inflation. High wage levels and steady inflow of remittances are also key factors driving the trend.

India's food inflation turns negative
Food inflation in the country saw a sharp decline in June, dropping to -1.06 per cent. The corresponding rates for rural and urban areas stood at -0.92 per cent and -1.22 per cent, respectively.

"The significant decline in headline inflation and food inflation during the month of June, 2025 is mainly attributed to favourable base effect and decline in inflation of vegetables, pulses, meat and fish, cereals and products, sugar and confectionery, milk and products," the Ministry said.

The prices of cereals rose 3.73 per cent against a 4.77 per cent increase in May, while those of pulses declined 11.76 per cent compared to an 8.22 per cent fall in May.

This significant drop in inflation is a welcome sign for the Reserve Bank of India which tries to maintain the rate within 2 per cent to 6 per cent. The central bank last month reduced its interest rates by half basis points to 5.50 per cent. 

The central bank also announced that it now expects inflation to average 3.7 per cent in the 2025-26 financial year. "Going forward, economic activity continues to maintain the momentum in 2025-26, supported by private consumption and traction in fixed capital formation," the RBI said. 

Rural inflation across the country dropped to 1.72 per cent in June, down from 2.59 per cent in May. Urban inflation also eased, falling to 2.56 per cent from 3.12 per cent the previous month.

Among states, Punjab recorded the second-highest inflation at 4.67 per cent, followed by Jammu and Kashmir at 4.38 per cent and Uttarakhand at 3.40 per cent.

Telangana registered the lowest inflation rate at -0.93 per cent, while Andhra Pradesh reported a flat rate of 0 per cent.