New GST rates may lower CPI inflation by 20 bps: Nomura

New GST rates may lower CPI inflation by 20 bps: Nomura

The decision to lower the goods and services tax(GST) rates on over 200 items could help pull down retail inflation by 20 basis points from the current levels driven by lower food and beverage prices, says a report.

According to global financial services major Nomura, the recent decision by the Centre to lower tax rates for 213 items, including 178 items of daily consumer use, is likely to lower CPI inflation by about 20 basis points (0.2percent).

“The government expects these(GST) measures to be disinflationary. Our quantitative analysis suggests that if (a big if) the GST tax changes are fully passed on to consumers, they would lower CPI inflation by estimated 20 basis points,” Nomura said.

The Business Standard, New Delhi, 15th November 2017

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