With other states supplying 80% of essential items, Kerala remains No. 1 in inflation

Kochi: The latest Central Government data has placed Kerala in the top spot for inflation in the country. In fact, the rate of price rise in the southern state is significantly higher than the national average. This could be mainly attributed to the state’s dependance on other regions for 80 per cent of its essential items.

Main causes
With the prices of diesel and petrol remaining high in India, the transportation cost for bringing essential items such as rice, vegetables, milk, meat, milk and groceries from other states leads to steep inflation in Kerala. Consequently, these items are more expensive in Kerala than any other part of the country. Availability of raw materials at the production centres and disruptions in the supply chain also reflect in the prices of the commodities sold in Kerala. Another factor contributing to high prices is the reluctance of many traders to pass on the concessions under the new Goods and Services Tax (GST) rates to consumers.

Weightage
Food items have been given the highest weightage of 46 per cent in the consumer price index. As these items are costly in Kerala, the consumer price index will also be high in the state.

The next highest weightage of 28.32 per cent is given to health, education and transport. The consumer price index will remain high as people in Kerala have to spend more to meet these requirements than residents of other states.

Additional weightage
The Central Ministry of Statistics and Programme Implementation considers certain other factors also while preparing the consumer price index for each state. For instance, an additional weightage is given to products and services which have high demand in that particular state, in order to present a clear picture of the consuming patterns.

In Kerala, this special weightage is given to coconut oil, gold, tourism, land and house construction.

Other factors
The purchasing power of people in the state is very high, compared to other regions in India, thanks to good wages and remittances by expatriates. As a result, high demand persists in the market, keeping prices steep.

Essential items are expensive in rural areas of Kerala also. This is because all goods, particularly food items, have to be initially brought to the big markets in cities and towns before being supplied to the villages, which adds to the transportation cost.