GST cuts clearly reduced inflation, but did they actually stoke demand?

India recorded ultra-low retail inflation of 0.25% in October and 0.71% in November. A sharp drop in food prices was a major reason behind the disinflation seen in recent months. The recent cuts in goods and services tax (GST) rates also played their part, primarily in October, the first full month with the revised rates.A Mint analysis of the inflation basket shows that October 2025 saw a month-on-month decline in prices (consumer price index) in 40% of the items—the highest ever under the current 2012 series, which has item-wise data from 2014.

Usually, about 20% of items see such declines during a month. However, the effect of the cuts is already tapering, and economists believe they may have a smaller impact than previously estimated.In a sweeping set of reforms, the GST Council cut indirect tax rates on nearly 400 items from 22 September. Data suggests the pass-through of rate cuts was sharp and rapid for vehicles and consumer durable electrical goods.

It was also visible, albeit only marginally, in many other items such as toothpaste, soap, and leather boots and shoes, among others. Small cars, two-wheelers and consumer durables saw rates drop from 28-31% to 18%. Household essentials such as toothpaste and soaps, dropped from the 12% or 18% slab to 5%.Of the 299 items for which the statistics ministry has inflation data, motor cars and jeeps recorded a 6.8% price decline in October, the sharpest among all items.

This was followed by two-wheelers, which recorded a 4.5% decline. Consumer durables such as televisions, washing machines, air conditioners, and refrigerators saw a 1.6-2.6% decline.While the effect of the cuts played out in November as well, it was much smaller. A research report by the State Bank of India