Hyderabad: For the first time since its formation in 2014, Telangana has recorded negative inflation (deflation) for two consecutive months — June and July — this year making it the only state in the country to do so.Economists say this unusual pattern mirrors extreme economic tendencies seen earlier during the Covid-19 pandemic, when Telangana also topped the national inflation chart with rates exceeding 10%. Both high inflation and deflation, they caution, signal strain in money circulation and price stability.According to the ministry of statistics, Telangana’s combined rural-urban inflation rate stood at -0.44% in July, as against the national average of 2.10%. In June, the state posted -0.93%, while India averaged 1.55%. Rural inflation in Telangana fell to -1.54% in July (from -0.91% in June), while urban inflation was -0.45% and -0.05% in the same months, respectively.“Negative inflation is not a positive indicator,” explained E Gitanand, business analyst and economic expert. “People are restricting themselves to bare minimum purchases. Other sectors, including real estate, are sluggish. The govt can improve the situation by injecting more money into the market through schemes or job creation,” he observed.Krishna Reddy Chittedi, associate professor at the School of Economics, University of Hyderabad, said the RBI recommends inflation between 2% and 4%. “Anything significantly below or above this range should be closely monitored,” he said.Prolonged deflation can prompt consumers to delay purchases, anticipating further price drops, which reduces demand and can trigger a cycle of falling production and job losses. However, economists stress that India’s current deflationary trend is largely driven by food prices and base effects rather than a collapse in demand — lowering the risk of a deflationary spiral.“Inflation percentages can reflect both positive and negative tendencies. Very low inflation may signal falling prices but not necessarily low cash flow, while very high inflation can mean abundant liquidity without always leading to high prices,” Krishna Reddy added.
