CHENNAI: Retail inflation in the state increased to 7.29% in October, well above the national rate of 6.09 per cent, according to provisional National Statistics Office data released on Thursday. Tamil Nadu appeared to post the highest headline rate among large states, ahead of Telangana (7.26%) and Andhra Pradesh (7.25%). Meanwhile, Karnataka and Keralam recorded a retail inflation of 7.07% and 6.22%, respectively.
In Tamil Nadu, the gap was widest in rural areas, where prices rose 7.86% against 6.63% nationally. Urban inflation stood at 6.84%, compared with 5.41% across the country.
K R Shanmugam, economic consultant to TN government and former director of Madras School of Economics, said the figure partly reflects an unusually low base a year earlier, alongside higher food and energy costs. He cautioned against treating one month’s data as evidence of a sustained trend. “Last year, inflation was very low. When the base is low, even a moderate increase in prices can produce a higher inflation reading,” he said.
He put India’s average inflation last year at about 0.5%, against roughly 2.1% in Tamil Nadu. A comparison of cumulative inflation between April and October would give a more accurate picture of the underlying trend, he said, adding that it was likely to be lower than the October figure.
He said TN has generally run above the national average, which is a composite of states with differing income and consumption patterns. Food and energy probably added to the rise, he said. Higher oil prices, linked to geopolitical tensions, could have lifted energy costs, while agricultural supply disruptions may have pushed up vegetable prices.
Nationally, food inflation stood at 8.94%, with onion prices up 116.22%. He said a detailed look at the inflation basket was needed to establish the contribution of each component. He stressed the difference between headline inflation and core inflation, which excludes volatile food and fuel.
The reading is above the RBI’s 6% tolerance ceiling. “Rising inflation is a concern, but this could be a short-term problem. I expect inflationary pressures to moderate and prices to stabilise,” he said, and added that banks could take time to adjust their lending rates in response to the RBI’s policy moves.