Gold Prices and Tariffs Set to Stir Inflation Despite Stable Food Costs

Despite stable food costs, global tariff conflicts and soaring gold prices may significantly impact India's consumer price index in the coming months. The Union Bank of India reports a potential inflation rise, stressing non-food essentials' vital role in overall inflation. Economists eye further repo rate reductions to manage inflation.

The ongoing global tariff wars and soaring gold prices are poised to meaningfully affect the consumer price index (CPI) in the upcoming months, even with stable food prices. This is according to a recent report by the Union Bank of India (UBI), emphasizing that non-food essentials, especially precious metals, are becoming pivotal in driving inflation.

According to figures released by the Ministry of Statistics and Programme Implementation on Tuesday, retail inflation in India decreased in April to 3.16 percent, down from 3.34 percent in March. The April CPI fell to a six-year low, with the decline attributed to lower prices of vegetables, pulses, fruits, meat, personal care, and cereals.

Overall inflation dropped by 18 basis points in April 2025 compared to the previous year. Core inflation hovered at 4.09 percent in April, with core inflation excluding gold remaining unchanged at 3.3 percent. The UBI anticipates another 50 basis points repo rate cut divided between June and August due to FY25’s CPI predictions.