Inflation high in Kerala as gold, personal care prices shoot up

The Southern state’s inflation has been over 6 percent since October 2024.

God’s own country bucked the trend, as gold, glitter, glam (personal care items), and coconuts drove up inflation in Kerala even as nearly all Indian states saw a dip in prices in line with the overall figure easing to a multi-month low in February.

In February, Kerala’s inflation rose to a five-year high of 7.3 percent from 6.8 percent in the previous month, even as food inflation dipped to a 21-month low, pushing India’s retail inflation to a seven-month low of 3.6 percent.

The Southern state’s inflation has been over 6 percent since October 2024.

Kerala’s inflation was more than twice that of the country, as the state spent 2.5 times more on personal care and effects, which includes gold, compared to the national average.

One possible reason could be the rise in gold prices. Gold inflation rose to a 53-month high of 35.6 percent last month, as global uncertainties along with a depreciation in rupee pushed up costs.

Gold, which accounts for a 25 percent share in personal care and effects inflation, rose to 13.6 percent compared with 10.6 percent in the previous month.

“The moderation in food has been partly offset by much higher monthly momentum in core – highest in last seven months! Personal Care and Effects has been the culprit, reflecting the gold price effect, which got a double boost owing to INR depreciation,” said Madhavi Arora, chief economist, Emkay Global.

A Moneycontrol analysis showed that gold could be one factor driving inflation in God’s own country, as the state spends more than twice as much on personal care and effects than the national average.

While personal care and effects had a 4.25 percent share in the inflation basket covering rural areas and 3.57 percent share in urban areas across the country, in Kerala, this category occupies a higher weight at 10.4 percent in rural areas and 6.6 percent in urban areas of the state.

“Kerala is often called the city of Gold. Gold plays a very important role in inflation when it comes to the state of Kerala because all the major retailers of gold come from that state,” said Vipul Shah, past chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC).

Experts indicate that inflation in the state is likely to stay elevated in the coming months as well.

“My outlook on gold prices is bullish as prices will remain firm due to global uncertainties especially around the Trump tariff situation. I do not see prices going down for another quarter, or until June, therefore inflation in Kerala will also remain high for at least during that period,” Shah added.

Gold was trading at Rs 86,297 in the spot market on March 13. The yellow metal was trading at a 13.1 percent premium from the start of 2025 and 14.7 percent higher compared with six-months earlier (October 2024).

Personal care and effects also include spending on toiletries and services like barbers and beauticians.

Powder, cream, lotion and perfume inflation was at a 16-month high of 3.8 percent in February.

What does Kerala spend more on?

But it’s not just gold that interests the people of Kerala. Data showed that the state had a higher share of spending on prepared meals, fruits, meat and fish and items like health, transport and communication and recreation services.

Fruit’s share in the inflation basket was nearly 40 percent higher than the national average. Inflation in this category touched a 10-year high of 14.82 percent in February as prices rose for a fourth consecutive month.

Coconut oil and coconuts, a staple for the state, witnessed an inflation rate of 55 percent and 41.6 percent, respectively.