SBI Research has said in its fresh report that due to inflation being slightly above 2 per cent level in August, the expectations of cutting interest rates in October have come down. The report further stated that the cuts cut in interest rates in December also do not appear fixed. Especially when strong growth estimates have been taken into consideration more than the first two quarters of the financial year. Let us also tell you what kind of information SBI Research has given in its report.
Doubt on loans EMI cuts
The report said that due to the 2 per cent level of inflation being slightly higher in August, the interest rates in October are looking difficult. If the first and second quarter development figures (projections) are taken into consideration, then the interest rate cut in December is also a bit difficult. The report further stated that changes in GST rates on services may reduce 40-45 basis marks on the basis of additional benefit of 50 percent in inflation on non-food products. The government has cut GST rates on many essential commodities (in total about 295), which has reduced their rate from 12 percent to 5 percent or zero. SBI Ekorap said that this tax deduction may reduce inflation in these goods in financial year 2026 by 25-30 basis points, provided its 60 % profit reached the consumer.
Retail inflation increases
After the 98 -month low of 1.55 per cent in August 2025, India’s retail inflation (CPI) increased slightly to 2.07 per cent in August, mainly due to high prices of food and beverages. The core inflation (which does not include food and fuel) also increased to 4.16 percent. Both rural and urban areas saw an increase in inflation. Rural inflation rose to 1.69 per cent (from 1.18 per cent in July), and urban inflation increased to 2.47 per cent (from 2.10 per cent). This increase was partially due to the low “base effect”, which means that the current price hike is no longer being compared to the very high prices of the previous year. Now, the actual increase in prices is more clearly visible.
Kerala the highest inflation
In August, 26 out of 35 states and union territories were less than 4 percent of inflation. Only in Kerala and Lakshadweep inflation was more than 6 percent. Interestingly, inflation in Kerala reached 9.04 percent, which was due to a huge increase in the prices of major food coconut oil in the state. In Kerala, rural inflation reached 10.05 percent and urban inflation reached 7.19 percent. On the weather front, heavy rains in major agricultural states like Punjab, Haryana, Rajasthan and Gujarat may affect food supply and increase food prices in the coming months. Between August and the beginning of September, the rainfall across India was about 9 percent more than normal, while in some states this level was even higher.