New Delhi, December 13 (IANS). Due to the reduction in GST (Goods and Services Tax), there is a possibility of a significant reduction in inflation in the country. According to a new report, Consumer Price Index (CPI) based inflation may come down by about 0.35 percent (35 basis points) in the current financial year (FY26).
The State Bank of India (SBI) report said that this decline in inflation will be mainly due to lower food prices and tax relief.
According to the SBI report, food inflation has remained low due to good Kharif crop, strong Rabi sowing, adequate water in reservoirs and moisture in the soil. For this reason, SBI has reduced the inflation estimate for the financial year 2025-26 to 1.8 percent, whereas for the financial year 2026-27 it is estimated to be 3.4 percent. Apart from this, the inflation estimate for the first quarter of fiscal year 2027 has also been reduced by 100 basis points to 3.9 percent as compared to earlier.
The Reserve Bank of India (RBI) has also reduced its estimates regarding inflation. In the December monetary policy, RBI reduced the inflation estimate for FY 2026 to 2 percent, which was earlier 2.6 percent in October and 4.2 percent in February.
The central bank believes that further changes in interest rates will be made on the basis of economic data, but indications are that the repo rate may remain around 5.25 percent for a long time.
According to a CRISIL report, the average CPI inflation in the financial year 2025-26 may be around 2.5 percent. The reduction in GST rates has benefited daily consumption items, leading to a decline in core inflation except gold. Especially its positive impact has been seen on the prices of packaged food, non-alcoholic drinks, snacks and prepared foods.
The report says that inflation affects different income groups differently. Poor and rural families spend a large part of their income on food and fuel, hence they have got the most relief from low food inflation. In the coming months, as the base effect on food items subsides, there may be a slight increase in inflation, but low crude oil prices and cut in GST will help in keeping inflation under control.
— IANS
Durgesh Bahadur/ABS