Nowadays our state is characterized by inflation. Inflation means rising prices of essential commodities are increasing alarmingly today in Kerala. It has created a grave economic situation in Kerala; it makes complicated the common people to make both ends meet. The prices of domestic gas, pulses, vegetables, fruits, rice and other necessary goods are sky rocketing. So three square meals a day has become a far-away dream. The hike in price of petrol and diesel trends to affect the entire the economic structure of Kerala. This rising prices does not effect to the privileged people of the society, it is hardest to the middle class society and those live under the below the poverty line. Deficiency of supply of goods in relation to demands is the main cause of the rising prices. Bad corps, untimely rains, greed of the shortage of goods in the market .The reduction or the elimination of the subsides and the other economic helps provided by the government also lead to the increase of the prices of the products. With the liberalization, globalization, and privatization, there has been an increased entry of multinationals and other institutions. They imposed heavy prices on their products so as the get super normal profits. This also leads to price rises. Rising prices creates many economic crises like poverty, under employment, etc. Therefore, the government should take strong steps to check price hike. Otherwise, it will make economic explosion leading to social tension and political unevenness.