Inflationary pressures eased further in August 2025 as the Bank of Baroda Essential Commodities Index (BoB ECI) remained in deflation for the fourth consecutive month, falling 1pc year-on-year, according to Bank of Baroda Research.
As per the report, the decline was driven by sharp price drops in key food items, especially onions (-37.5 pc YoY) and potatoes (-31.5 pc YoY), alongside a steady fall in pulses such as Tur/Arhar (-29 pc).
Better kharif sowing and improved supply have underpinned the trend. Tomatoes, which saw a brief spike, are now correcting downward.
On a sequential basis, the index rose 1 pc month-on-month, which analysts attribute to seasonal effects rather than a reversal in inflationary momentum. The easing trend has continued into September, with the index tracking at -0.9 pc YoY in the first nine days.
Global factors also supported the decline. “Cereals, energy, and metal prices have remained favourable, while GST rate cuts on FMCG and durable goods are expected to shave 55–75 basis points off headline CPI,” said economist Dipanwita Mazumdar.
Bank of Baroda projects consumer price inflation to settle around 2 pc, with downside risks persisting.
However, the report flagged uneven monsoon patterns in some onion- and potato-growing states as a potential risk, though no immediate price surge is expected. Domestic edible oil prices could remain sticky amid strong global demand.
The data indicates that India’s inflation outlook is stabilizing, offering relief to policymakers and consumers ahead of the festive season.