India’s inflation is cooling down, and it could hit a low 2% mark for August, according to a fresh report from Bank of Baroda (BOB). The bank’s Essential Commodity Index (ECI) shows deflation for the fourth straight month, dropping 1% year-on-year in August and another 0.9% in the first nine days of September. This means prices of everyday essentials are falling, which is great news for your wallet.
The biggest wins come from vegetables and pulses, thanks to stronger production. Tomatoes, onions, and potatoes are seeing sharp price drops—tomatoes especially, with a clear downward trend. Global food and energy prices are also helping keep inflation in check.
The government’s recent move to cut GST rates on many FMCG products and durable goods is a big boost too. BOB estimates this could lower the Consumer Price Index (CPI) by 55-75 basis points, easing pressure on overall inflation.
Out of 20 key commodities in the index, 10 are now in deflation. Onions lead the pack with a whopping 37.5% year-on-year drop—the steepest since January 2021. Potatoes are at their lowest retail prices in 44 months. Pulses are following suit, with tur/arhar seeing a massive 29% decline in August. Other pulses like urad (-8.9%), moong (-5.2%), and masoor (-1.4%) are also cheaper.
Better harvests are driving this trend. In the current Kharif season, more land is under pulses cultivation, helping stabilize supplies. Rice prices are softening too, though at a slower rate. On a month-to-month basis, the ECI rose 1% in August, but after adjusting for seasonal factors, it’s up just 0.8%—showing some natural ups and downs at play.
With these falling prices, India’s inflation outlook looks promising as we head into September. Keep an eye on your grocery bills—they might get even lighter soon!
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