August inflation tops 2% clouding rate cut hope

With August inflation print a tad higher than the 2 per cent mark, a rate cut in October is unlikely, according to a report by SBI Research, adding that even a rate cut in December looks a little difficult if growth numbers for Q1 and estimated Q2 data are taken into consideration.

- INDO-ASIAN NEWS SERVICE

As the Goods and Service Tax (GST) rate on around 295 essential items has been reduced from 12 per cent to 5 per cent or NIL, the consumer price index (CPI) inflation in this category may come down by 25-30 basis points in FY26 after considering a 60 per cent pass through effect on food items, said the report.

Apart from this, the rationalisation of GST rates of services should also lead to another 40-45 bps reduction in CPI inflation on other goods and service items, considering a 50 per cent pass-through effect.