Cars, ACs cheaper but food prices inched up after GST cuts: Bank of Baroda
The goods and services tax (GST) rate reductions under GST 2.0 had a differential impact on consumer prices, with automobiles and home appliances seeing significant declines. However, everyday food items and personal care products registered little relief or even modest increases owing to rising input costs, according to a fresh analysis by Bank of Baroda’s Economic Research Department.
“One of the motivations for lowering the GST rates last year was to bring about reduction in the prices of goods and services, which would help to spur consumption,” the report stated, adding that any assessment must be viewed against the backdrop of rising input costs in several categories.
The report, released on Wednesday and titled “GST reforms and impact on prices”, tracks Consumer Price Index changes for a basket of household goods between August 2025 and March 2026. The GST rate rationalisation took effect from September 2025. While GST rates were cut across a wide range of goods, typically from 18 per cent or 12 per cent to 5 per cent or even exemption, the pass-through to final prices has been uneven.
