Onion, Potato Prices Drive CPI Down to 2% in August: BoB Research
Inflationary pressures ease for the fourth straight month as Bank of Baroda projects stable outlook despite uneven monsoon risks.
New Delhi, Sep 11: Inflationary pressures eased further in August 2025 as the Bank of Baroda Essential Commodities Index (BoB ECI) stayed in deflation for the fourth consecutive month, falling 1% year-on-year, Bank of Baroda Research said.
The decline was led by sharp price corrections in key food items, especially onions (-37.5% YoY) and potatoes (-31.5% YoY), along with a significant fall in pulses such as Tur/Arhar (-29%). Improved kharif sowing and steady supply conditions supported the downtrend, while tomatoes, which saw a temporary spike, have also started to correct.
On a sequential basis, the index rose 1% month-on-month, which analysts attribute to seasonal effects rather than any reversal in momentum. The easing trend has carried into September, with the index tracking at -0.9% YoY in the first nine days.
Global factors such as stable cereals, energy, and metal prices also aided the decline. “GST rate cuts on FMCG and durable goods are expected to shave 55–75 basis points off headline CPI,” noted Bank of Baroda economist Dipanwita Mazumdar.
The bank projects consumer price inflation to settle around 2% in August, with downside risks persisting. However, it flagged uneven monsoon patterns in onion- and potato-growing states as a potential risk, even though no immediate surge is expected. Domestic edible oil prices may remain sticky due to firm global demand.
The data suggests India’s inflation outlook is stabilizing, providing relief to policymakers and consumers ahead of the festive season.
