Kerala has, in the last couple of months, witnessed furore over escalating prices of essential commodities. The Opposition has targeted the Pinarayi Vijayan government, accusing it of “failing miserably” to contain rising prices. Opposition Leader VD Satheesan claimed that middle-class households are facing an added monthly burden of ₹10,000–₹15,000 compared to last year. However, this contention may not be completely accurate. 

Responding to Opposition’s tirade, Kerala Food & Civil Supplies Minister G.R. Anil argued that the inflation number does not reflect a broad rise in essential commodities. “There has been no rise in the prices of meat, eggs, milk, fish, or sugar. In fact, vegetables, pulses, and spices have become cheaper,” Minister Anil said. Confused?

Economist R Ramakumar says the noise around Kerala’s inflation is “deeply misleading” and rooted in a misunderstanding of what inflation actually measures.

“Inflation does not mean prices are high. It only means prices have risen compared to the previous year,” R Ramakumar explained. “A state can have low absolute prices but still show high inflation if the starting base was very low.”

"From 2020 to 2024, Kerala’s inflation was below or near the national average, ranking between 14th and 17th among states,” he said. 

So what changed in 2024–25? Two main factors stand out:

1. Gold and Silver Boom

  • Gold prices in Kerala nearly doubled in a year, rising from about ₹42,000–45,000 per sovereign in early 2024 to over ₹74,000 in August 2025.
  • Since “gold and silver” carry unusually high weight in Kerala’s CPI basket – 42.5% in rural areas and 38.5% in urban areas, compared to about 33-35% nationally, the jump disproportionately inflated Kerala’s headline rate.
  • “When price of gold shoots up, Kerala’s inflation automatically looks higher than other states, because gold matters more in our consumption basket,” R Ramakumar noted.

2. Coconut Oil Spike

  • Kerala’s dependence on coconut and coconut oil, used daily in most households, makes the state uniquely vulnerable when supply falls.
  • Production shortfalls in Kerala and neighbouring states pushed coconut oil prices higher from April-May 2025 onwards.
  • Since Oils and Fats category carry nearly 46% weight in Kerala’s CPI, this price rise sharply influenced inflation, even though cereals, pulses, vegetables, and sugar stayed stable.

Headline vs. Reality

While 9.04% inflation sounds alarming, economists stress that the pain is not uniform across households.

“Households buying vegetables, pulses, or milk are not seeing the kind of shock that the inflation number suggests,” said R Ramakumar.

“This is why using headline inflation to argue that daily life has become unaffordable in Kerala is simply wrong.”

What this means going forward

  • Temporary spike likely: If gold prices cool and coconut production improves, Kerala’s inflation rate could fall sharply back toward the national average.
  • Political stakes: The Opposition insists the government is ignoring genuine household stress. The government maintains critics are cherry-picking numbers to paint a crisis.
  • Public perception challenge: Social media posts with maps ranking Kerala as “worst in inflation” continue to shape public opinion, even if the ground reality is more nuanced.

As R Ramakumar summed it up:

“Kerala’s is not a story of runaway prices. It is a story of how gold and coconut oil, two items with unique weight here, distorted the inflation figure. Essentials remain under control.”