Gold and Silver Prices are Inflating India’s Core Inflation: Economic Survey
The Economic Survey 2026 has mentioned that gold and silver prices are adding to India’s core inflation
According to the Economic Survey 2026, Gold and silver prices (key metals) are pushing up India’s core inflation. It highlights how household saving behaviour is influencing inflation trends beyond food and fuel prices.
Core inflation, which excludes food and fuel, is used to measure underlying price pressures in the economy. The Survey notes that movements in precious metal prices have a growing impact on this measure, even when prices of most consumer goods and services remain stable.
In India, gold and silver are widely seen as a form of financial security rather than just consumption items. Households often buy precious metals to protect their savings from inflation, income uncertainty, health expenses and economic shocks. When confidence about the future weakens, demand for gold and silver tends to rise.
This increased demand, combined with global price movements, pushes up domestic gold and silver prices. Since these metals are part of the core inflation basket, their rising prices directly feed into core inflation numbers, making inflation appear more persistent.
The Economic Survey also links this trend to inflation expectations. When households expect prices to rise, they shift savings towards gold as a hedge, further driving up prices. This creates a cycle in which fear of inflation leads to higher gold demand, which in turn raises measured inflation.
For policymakers, this presents a challenge. Elevated core inflation may not always reflect strong demand or overheating in the economy, but rather cautious household behaviour and a preference for safe assets. The Survey suggests that inflation data needs to be interpreted carefully in light of these structural factors.
The findings underlines a distinct feature of India’s economy, where trust and security often shape financial decisions. As long as gold and silver remain the preferred store of value for households, their prices are likely to continue influencing core inflation even when food and fuel prices are under control.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
