During pre-COVID, Kerala maintained higher consumer prices as compared to the national average as well as the southern states.
During the pandemic, Kerala has been able to keep the prices lower, unlike the southern states. More specifically, rural prices were lower than urban prices in Kerala.
The lower prices in Kerala during the pandemic were driven by essential commodities like food and beverages

While the price does matter for all, rising price or inflation hits the poor hardest. In simple terms, the price of a commodity is determined by its demand and supply, and a market is said to be in equilibrium when the quantity demanded matches the quantity supplied. Evidently, the COVID-19 induced lockdowns impacted both supply and demand. The lockdown disrupted production and impacted the supply of goods and services on the one hand and loss of jobs and closure of businesses impacted demand on the other. Left to the market, under such supply and demand shocks the prices could be highly volatile and negatively affect the consumers. In situations such as this, state interventions could help regulate the prices to a large extent. How has Kerala fared with respect to managing the inflationary pressures? This study analyses the price trends of Kerala before the COVID-19 and during the months of the pandemic in comparison with the national average and other southern states. To present the emerging patterns in Kerala at the aggregate level, the Consumer Price Index (CPI) data published by the Ministry of Statistics and Program Implementation (MOSPI) from June 2020 to October 2020 has been used. At the disaggregate level, price bulletin data provided by the Department of Economics and Statistics, Government of Kerala has been used.  
Kerala in comparative perspective
Kerala has been showing higher prices than the national average as well as all the southern states particularly from 2017-18 through 2019-20. In 2017-18, prices were nearly 40 percent higher in Kerala (6.0%) as compared to the national average (3.6%). Though the difference narrowed over the next two years, Kerala maintained high prices in 2019-20 (see Table 1).
A disaggregate analysis of prices across rural and urban areas revealed that prices in rural Kerala were higher than urban Kerala while for all India and other southern states the trend was just the opposite. In 2019-20, the inflation in rural Kerala was 6.6 percent and that of urban Kerala was 5.4 percent. On the contrary inflation in rural India was 4.3 percent as compared to 5.6 percent in urban India (see Table 1).
Table 1.  Trends in consumer prices (%)

   Source: Author’s calculation using MOSPI data.
 

The pre-COVID-19 patterns in prices seem to have reversed in Kerala during the pandemic. Though there is an increasing trend in prices from June to October both in Kerala and all India, prices in Kerala have been lower than the national average for all the months (see Table 2). There has been an almost one percentage point difference between Kerala and all India prices. In fact, prices in Kerala have been lower than in all the southern states except Karnataka (see Table 2). Further, as opposed to the pre-COVID trend, prices in rural Kerala were lower than urban Kerala from July to October while for all other southern states prices in rural areas were found to be higher than urban areas (see Table 2). The price difference between rural Kerala and urban Kerala has been over one percent during July, August, and September, although the difference reduced in October 2020.
Table 2.  Consumer prices in Kerala and the other south Indian states from June to October 2020 (in %)