Overview

• Government data show CPI rose to 2.07% year-on-year in August from July’s revised 1.61%, with higher prices in vegetables, meat and fish, oils and fats, eggs, and personal care items.
• Food inflation stayed in deflation at -0.69% year-on-year, while Bank of Baroda’s commodity index remained negative on steep falls in onions and potatoes.
• Core inflation was steady near 4.1%–4.3%, with softer services offset by very high gold inflation pushing up core goods.
• Economists expect the GST reductions taking effect on September 22 to lower headline CPI by roughly 50–110 basis points depending on pass-through, and some consumer companies have begun announcing price cuts.
• Weather remains a watchpoint after late-August and early-September floods, and a UBI report estimates WPI turned slightly positive around 0.45% year-on-year in August.