The impact of GST relief… A sharp drop in the prices of pulses and vegetables, breaking the back of inflation!

New Delhi. Inflation used to break people’s backs. This time, inflation itself is breaking the back. The impact of GST relief is now visible. Retail inflation fell to a 99-month low in September due to a sharp drop in vegetable and pulse prices. Consumer price-based inflation fell to 1.54 percent in September, down from 2.07 percent the previous month. This is the lowest since June 2017. The National Statistical Office (NSO) released inflation data on Monday.

According to the NSO, core inflation and food inflation declined during September 2025 due to a favorable base effect, as well as lower prices of vegetables, oils and fats, fruits, pulses, cereals, eggs, fuel, and energy. Retail inflation was at 9.24 percent in September last year.

Food Inflation
Food inflation during this period was minus 2.28 percent, the lowest since December 2018. It was minus 0.64 percent in August. According to the data, vegetable prices fell by 21.38 percent and pulses and their products by 15.32 percent in September compared to a year ago.

However, the inflation rate for edible oils and fatty foods was 18.34 percent and for fruits 9.93 percent. Inflation rates for other food items remained under control. It is noteworthy that food items account for approximately 40 percent of the food inflation calculation and have a significant impact on the core inflation rate.

Initial Impact of GST Relief
New inflation data shows that price pressures have eased following the GST relief implemented on September 22nd, and its broader impact is expected in the coming months. Prices are likely to remain under control going forward. According to the RBI, rationalized GST rates are likely to have a moderating effect on inflation. Additionally, consumption and growth will be boosted.

Below RBI’s forecast
At the Monetary Review Committee meeting held in October, the RBI lowered its retail inflation forecast for the current financial year to 2.6 percent, compared to the previous estimate of 3.1 percent. It also projected 1.8 percent for the second quarter (July-September). The September inflation rate is also below this estimate. According to the RBI, economic growth improved in the first quarter due to a good monsoon, and the overall performance of the economy remained strong. Retail inflation has also declined significantly.

These prices fluctuated.
Commodity                     December 2024                             January 2025
Vegetables –                 15.92                                     21.38
Pulses –                     14.53                                   15.32
Eggs                         3.12                                   2.76
Spices –                   3.24                                     3.07
Grains 2.70 2.06
Milk, milk products2.63 2.51
Fruits 11.65 11.65 9.93