Migration of labour from low-income states resulting in higher inflation in Kerala, TN: SBI study

The migration of labour from low-income states to high income states in search of employment opportunities is resulting in higher inflation in high income States in the South such as Kerala and Tamil Nadu, a research report by the State Bank of India showed. “Reading between the lines, we believe that migration of labour from low-income states to high income states in search of employment opportunities is resulting in higher inflation in high income states than lower income states as vouched by food inflation across cohort of high income / middle income and low-income states suggesting higher purchasing power anchors higher inflation,” India’s largest lender said in the report. Rural inflation higher than urban inflation “There are 9 States among major states, where inflation in rural areas is higher than the all-India rural inflation. Starting that CPI inflation may come down to 3.9% in Q4 FY25 and average to 4.7% in FY25, SBI said based on this trend, “we expect FY26 inflation may come 4.0-4.2% and core inflation in the range of 4.2% to 4.4%.” “With benign inflation this month and going forward, we expect a cumulative rate cut over the cycle could be at least 75 basis points, with successive rate cuts in next policy April and August 2025.