GST rate relief delivers an uneven scorecard. (This is a representative image) NEW DELHI/MUMBAI: A year after GST rationalisation, higher commodity prices have eroded a large part of the gains with prices of several products - from food to consumer goods and automobiles - slowly inching up.

Within the multiple segments that saw rate reduction, with some of the slabs and cess on most goods being removed, automobiles have emerged as the clearest winner. Consumers initially paid less, demand accelerated and sales touched new highs.

Automobile retail sales reached 29 million units during the 11 months ended Aug 2026, rising 20% from a year earlier, according to ICRA. Passenger vehicle registrations grew 22%, while two-wheelers rose 20%, commercial vehicles 19% and tractors 23%."

The changes in past 12 monthsThe momentum was visible in manufacturer dispatches, as per Siam data, over the last six months. " The broader demand environment remains fundamentally healthy," Siam director general Rajesh Menon said in Aug.

Vehicle prices illustrate both the original benefit and its subsequent dilution. 7 lakh after Sept 22, 2025 and remains at that level.

6 lakh (see graphic). The outcome has been more mixed in fast-moving consumer goods.

GST on several essentials was reduced to 5% from 12% or 18%, initially prompting average price cuts of around 10%. Companies have since raised prices by 6-7% to manage higher raw-material, energy and logistics costs, including inflation linked to the West Asia conflict."

Consumers are still better off by 2-3%," said Mayank Shah, chief marketing officer at Parle Products. He, however, cautioned that companies may need another round of price increases closer to Diwali if input-cost inflation persists.

Nestle India said the GST reduction provided a "positive impetus to consumption". But Ronak Shah, consumer-sector analyst at Equirus Securities, said it had delivered "more of an affordability boost than a direct demand surge" for FMCG companies."

The GST reduction has provided some cushion against cost inflation, rather than translating into a meaningful increase in category consumption," he said. Premium and discretionary products saw some incremental demand, but subsequent mid-to-high-single-digit price increases diluted the gains.

Apparel largely missed out. GST on clothing priced above Rs 2,500 rose from 12% to 18%, affecting festive and occasion wear.