(Source: Poll of Polls)
Inflation Set To Cool Further As Tomato, Onion, And Potato Prices Drop: Bank of Baroda
The report attributes the moderation to sustained deflation in essential commodities and a sharp correction in the prices of tomatoes, onions, and potatoes (TOP).
Headline inflation is expected to ease further with the Consumer Price Index (CPI) projected at around 1.2 per cent for September 2025, aided by a continued decline in food prices, according to Bank of Baroda's latest Price Picture report. The report attributes the moderation to sustained deflation in essential commodities and a sharp correction in the prices of tomatoes, onions, and potatoes (TOP).
"We expect CPI in Sep'25 to be at approx. 1.2 per cent. It has also the advantage of a favourable statistical base. Headline CPI is largely experiencing a food driven downward spiral. This is supported by robust arrival statistics of TOP vegetables." noted the report.
The Bank of Baroda Essential Commodities Index (BoB ECI) remained in deflation for the fifth consecutive month, falling by 1 per cent year-on-year in September and by a sharper 3.8 per cent in the first six days of October. Sequentially, the index also slipped 0.3 per cent month-on-month, reflecting easing price pressures across key food groups.
Tomatoes saw a notable correction with retail prices dropping 8.3 per cent in September, while onions and potatoes declined by 46.2 per cent and 30.9 per cent respectively. The fall was supported by buoyant arrivals and effective supply management. "Robust arrival statistics for TOP cumulatively have risen by 10.3 per cent in FYTD26 compared to a contraction of 15.4 per cent in the same period last year," the report noted.
Favourable global food prices and GST rate cuts being passed on by automakers, FMCG firms, and e-commerce platforms have further reinforced disinflationary trends. BoB expect headline CPI to undershoot the Reserve Bank of India's forecast for FY26.
"Intermediate input cost is showing some stiffening. However, the immediate passthrough to CPI is limited." noted the report. At the same time, the report cautioned that while food prices remain soft, some firmness is visible in metals, minerals, and energy costs due to elevated tariffs. However, it said the pass-through of these input costs to consumer prices is limited. Excluding gold, core inflation is expected to stay within 3.1 per cent to 3.5 per cent.
However, with the harvest season ahead, food inflation risks are seen on the downside, particularly for vegetables. "The coming months will also be the month of harvest of all these crops, so arrivals are expected to be on the upside." the report added.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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