GST rate-cut gains eroded by ‘galloping’ inflation: Cong

The Congress on Monday claimed that rising commodity prices have eroded much of the benefit from GST rate cuts introduced last year, with prices of several consumer products moving back towards pre-reduction levels.

Congress general secretary in-charge communications Jairam Ramesh shared a media report which said that higher prices of food, consumer goods and automobiles had eaten into the gains from GST rationalisation a year after its implementation.

“The GST rate cuts in September 2025 were proclaimed to be game changers. They had, of course, been long overdue - but to boast of them as magic wands was hyperbole,” Ramesh said on X.

He said the impact on consumption had been mixed, with automobile sales benefiting while apparel sales had not seen a comparable boost.

“Now comes evidence that the effect of GST rate cuts on various commodities is being neutralised by ‘galloping inflation’,” Ramesh said.

He claimed that prices of several consumer goods had returned close to their pre-GST cut levels within a year without a meaningful increase in consumption.

A report published on Monday found that higher commodity prices had reduced the gains from GST rationalisation across several segments. Automobiles have seen a stronger consumption response, with retail sales reaching 29 million units in the 11 months to August, up 20 per cent year-on-year, according to ICRA.

Ramesh also questioned whether headline GDP growth figures adequately reflected the broader state of the economy.

“Headline quarterly GDP numbers may give momentary elation to the ruling establishment overlooking their imperfections, but there are many faultlines in the India growth story that are simply not being acknowledged by the PM and his brigade of cheerleaders,” he said.

He claimed that consumption was not buoyant across income groups, private investment was not booming and real wages were declining.

The Congress has continued to raise inflation and household purchasing power as economic concerns. Recent official data showed India's retail inflation rising to 4.82 per cent in August, its highest level since the current inflation series began in January, with core inflation also increasing.