Consumers got some relief in August as India’s retail inflation (CPI) edged up slightly to 2.07%, but remained at one of the lowest levels in recent years, according to Emkay Global Research. The moderation came largely on the back of easing food prices.
Vegetable inflation slowed compared to July, though tomato prices still spiked 26% month-on-month. Fruits stayed nearly flat at 0.1%, while pulses dipped 0.4%. Protein items like meat, fish (-1%) and eggs (-2%) also turned cheaper, giving consumers some respite.
“Headline CPI rose just 0.5% MoM – the lowest in three months – thanks to disinflation in food categories,” Emkay analysts Madhavi Arora and Harshal Patel noted in their report
Core Inflation Driven by Gold, But Everyday Items Stable
While food costs cooled, core inflation nudged higher to 4.3%, mainly due to soaring gold prices, which jumped 40% year-on-year. This pushed up personal care costs by 1%. However, excluding gold, core inflation fell to 3.7%, suggesting stability in other consumer categories like household goods and services.
For households, this means that while luxury items like jewelry are costlier, day-to-day essentials remain relatively steady in price.
GST Cuts Could Push Inflation Below 1%
The bigger relief is yet to come. The government’s recent GST rationalization is expected to lower prices across categories such as autos, household items, and packaged goods. Emkay estimates that inflation could fall to sub-1% in October, with around 70% of GST cuts likely to be passed on to consumers.
“With sectors like auto already announcing price resets, households may start noticing lower bills as early as next month,” the report stated
What This Means for Consumers
Lower inflation directly boosts consumer purchasing power, whether at the grocery store, the electronics counter, or while buying a car. Analysts expect headline CPI for FY26 to average 2.2%, far below the Reserve Bank of India’s projection of 3.1%.
For families, this translates to more money left in hand after routine expenses. However, experts warn that extreme weather or supply shocks could still trigger short-term spikes in food prices.
Despite the relief, the RBI’s focus on one-year ahead inflation may be misplaced amid consistent domestic undershoots and Asia’s disinflationary bias, Emkay added.
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