The Consumer Price Index (CPI) for January 2025 is anticipated to drop to 2.8%, marking the lowest level since November 2015, despite a month-on-month increase of 0.6%. This trend suggests a continuation of monetary easing by the central bank.

According to a statement by JS Global, the ongoing sharp disinflation trend is expected to bring the average inflation for the first seven months of the fiscal year 2025 down to 6.7%, a significant decrease from the previous year’s average of 28.7%.

The statement indicates that the base case CPI estimate for the fiscal year 2025 is projected to average at 6.3%. However, an immediate addition of Rs10 per liter in the Petroleum Development Levy could slightly increase this average to approximately 6.4%.

JS Global notes that the persistent decline in inflation suggests that the Monetary Policy Committee may continue its easing cycle. It is anticipated that another policy rate cut will occur this month, with a projected reduction of 100 basis points, which is smaller compared to previous cuts.

A recent market survey conducted by JS Global reveals expectations for further policy rate cuts, with a consensus leaning towards a 100 basis point reduction and an anticipation that the easing cycle will extend beyond January 2025.