New Delhi, Sep 5
The GST reforms can moderate CPI inflation in the range of 65-75 bps over FY26-27, an SBI report has said, adding that the simpler GST 2.0 system unleashes plethora of benefits in the form of consumption boost primarily from the middle class, low inflation, ease of business and ease of living.
Since the GST rate of essential items (around 295 items) has declined from 12 per cent to 5 per cent/nil, the CPI inflation in this category may also come down by 25- 30 bps in FY26 after considering a 60 per cent pass through effect on food items.
Apart from this, the rationalisation of GST rates of services also leads to another 40-45 bps reduction in CPI inflation on other goods and service items, considering a 50 per cent pass through effect, the report mentioned.
“Overall, we believe CPI inflation may be moderated in the range of 65-75 bps over FY26-27,” the SBI report noted.