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Even though the GST rate cut by the government will lighten the burden of pockets of the common man in the coming days, but the retail inflation figures on Friday have increased some concern. According to recent government data, the common man's plate has become expensive in August. Last month, retail inflation rose from 1.55% to 2.07% in July. This means that the relief in inflation for previous months has decreased slightly in August. However, Navratri i.e. GST 2.0 will be implemented from 22 September, but still people expect RBI.

According to a report by HSBC, if companies take advantage of this to the customers, then the recent GST cuts can reduce inflation. In this case, the Reserve Bank of India (RBI) can reduce the repo rate 0.25% and 5.25% in the fourth quarter of this year. According to the report, tax deduction can reduce retail inflation (CPI) by 1%, but if companies only give partial benefits to customers, then inflation will reduce only by 0.5%. In such a situation, the repo rate cut can be enhanced, which can give relief to the man directly.

EMI burden may be less

The report said that the government will harm the government due to the reduction in GST rates, but the common man will benefit. However, increasing consumption throughout the year may lead to GDP growth by 0.2%. But this will happen only when the government does not impose much tax to compensate for this increased consumption. Apart from this, if the common man has more money in his hand, then consumption will also increase. In doing so, the repo rate cut can play a big role.

There will be emphasis on increasing consumption

HSBC also said that GST cuts should be seen on a large scale. If it is combined with this year's income tax deduction (0.3%of GDP) and low cost of repaying debt (0.17%of GDP) due to reduced repo rate, the total increase in consumption can be up to 0.6%of GDP. However, people can put some part of it in savings, which will reduce the real benefit slightly.

When was the repo rate reduced earlier

RBI kept the repo rate stable at 5.5% in the August Monetary Policy Committee (MPC) meeting. However, the central bank had earlier cut the repo rate of 0.50% or 50 basis points in June. This was the third consecutive time RBI had reduced the repo rate. Earlier, in the last two meetings of February 2025 and April 2025, the repo rate was reduced by 0.25% 0.25%.