at idle you're going to have max fuel consumption. whereas when you're moving and take your foot off the accelerator its going to go to minimum consumption.
1100 rpm seems a bit high, then again i don't know much about the m20. Idle Control Valve perhaps?
gray/blue smoke = burning oil.
so you're driving an early 525? can you fill out your profile for us? someone with more knowledge than me will be able to help more with as much info as you can. location, mileage, production date, auto/manual, etc etc.
welcome to the forum.