GST cuts cooled prices of durables, not of essentials: Study

Reducing Goods and Services Tax (GST) rates last year has not translated into lower consumer prices for several frequently consumed items, according to anewworkingpaperby the National Institute of Public Finance and Policy (NIPFP), which used the revised all-India Consumer Price Index (CPI) series for its analysis.

- MONIKA YADAV

However, the study has found that most durables such as motor vehicles, bicycles and air conditioners, among others, witnessed a decline in price, suggesting relatively effective price transmission in discretionary and high-value goods.

The CPI for food, household goods and personal care products has risen in the four months following the rate cuts, indicating incomplete transmission of GST rate reductions in this group, the report said. “The early signs indicate

THE CPI FOR FOOD, HOUSEHOLD GOODS AND PERSONAL CARE PRODUCTS HAS RISEN IN THE 4 MONTHS AFTER THE RATE CUTS, INDICATING INCOMPLETE TRANSMISSION OF GST RATE REDUCTIONS IN THIS GROUP

that for a substantial segment of frequently consumed goods, the expected price moderation followingthe GST rate rationalisation hasnotyet materialised.”