Hyderabad: Telangana has slipped into deflation, reporting a 0.15 per cent fall in retail prices in September, according to the latest data from the Union Ministry of Statistics and Programme Implementation (MoSPI).
Telangana’s retail price trajectory since June paints a peculiar picture of economic cooling. For the first time since its formation, Telangana entered the deflation zone in June this year with -0.93 per cent, followed by -0.44 per cent in July.
A brief recovery was witnessed with 0.94 per cent inflation in August, only to slip back into deflation of -0.15 percent in September. This makes Telangana the only state in India to have entered deflation territory thrice in four months.
According to the data, in September, rural Telangana recorded -0.29 per cent deflation and urban areas -0.05 per cent, both far below the national average inflation of 1.54 per cent (1.07 per cent in rural and 2.04 per cent in urban India).
While consumers might view falling prices as relief, the economists cautioned that persistent deflation was a signal of weak consumption and sluggish economic activity, particularly in non-urban belts. They pointed to the State’s overdependence on urban consumption from Hyderabad, contrasting with slow rural recovery and weakened discretionary spending.
Officials attributed the downward trend to decreased food prices, particularly vegetables, cereals, pulses, and edible oils, as well as GST rate cuts and a favourable base effect. However, a senior official admitted that continued deflation could indicate weak demand in the retail trade and rural sectors, suggesting that the economic pulse beyond Hyderabad may be losing its rhythm.
As flood inflation remained firm at the national level, he did not rule out the possibility that Telangana’s price decline was due to local dynamics.
Economists warned that prolonged deflation can hurt producers and shrink State revenues, which was evident in the last few months. If prices continue to fall, they warned that businesses will defer investment, jobs will stagnate, and consumption will weaken further.
Harish Rao reacts to deflation
Reacting to the deflation in Telangana, Bharat Rastra Samithi (BRS) MLA T Harish Rao questioned whether Telangana’s economy is collapsing under the Congress government.
Rao said that while India’s retail inflation has fallen to an eight-year low of 1.5 percent, Telangana has shockingly slipped into deflation in three of the last four months. “This is a clear indicator of deep economic distress under the Bulldozer Congress Government,” he added.
The former Telangana minister shared the ministry’s report and highlighted that deflation in Telangana in June stood at 0.93 percent and at 0.44 and 015 percent in July and September, respectively.
In a post on X, the former Telangana finance minister said, “September, traditionally a period of peak consumption driven by Bathukamma and Dussehra, should have witnessed positive inflation reflecting robust market activity. Instead, the continued fall in prices exposes the collapse of consumer demand and the failure of the state’s economic policies.”
He alleged that the deflation has been caused by policy paralysis, financial mismanagement, and vendetta-driven governance, which have crippled local markets, slowed growth, and pushed Telangana’s economy into a dangerous downward spiral.
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