Despite the government’s recent GST rate cuts expected to ease consumer prices, India’s retail inflation has ticked up in August 2025, raising concerns. The Consumer Price Index (CPI) inflation rose from a low of 1.55% in July to 2.07% in August, indicating a slowdown in the earlier relief received by consumers. The increase is chiefly attributed to higher prices of vegetables, meat and fish, oils and fats, personal care products, and eggs.
HSBC economists suggest that if companies pass on the full benefit of GST rate reductions, this could reduce retail inflation by about 1%. However, partial benefits might result in only 0.5% inflation relief. In such scenarios, the Reserve Bank of India (RBI) might consider further repo rate cuts — possibly by 0.25% — in the fourth quarter of 2025, potentially easing the burden on consumers and borrowers through lower loan EMIs.
The RBI has already reduced the repo rate three times earlier this year; a 0.25% cut each in February and April, and a 0.50% cut in June. The central bank kept rates unchanged in its August Monetary Policy Committee meeting, but future cuts are contingent on inflation trends and economic growth risks.
While the stock markets remain buoyant, the contrast with inflation and bond markets indicates underlying volatility and divergent investor sentiments. Retail consumers hope that lower inflation and potential RBI rate cuts will translate into reduced EMIs, but the situation remains dynamic and depends on whether inflationary pressures subside in coming months.
In conclusion, while recent GST cuts are steps in the right direction, inflation pressures and RBI’s monetary policy decisions will determine how soon Indians see relief in loan EMIs.Gold prices have risen by 32% this year due to several factors such as geopolitical uncertainty following Trump's re-election and tariff announcements, the weakening U.S. dollar, expected cuts in U.S. interest rates, and central banks diversifying from dollar reserves. Despite a strong stock market, gold's rise reflects concerns among institutional investors who are more cautious, while retail investors remain optimistic and use gold as a safety net. Inflation is not yet at crisis levels but is expected to rise, prompting investors and central banks to hedge risks by buying gold. This surge in gold reflects a balance of optimism in stocks and caution due to global economic uncertainty
