Karachi: The Consumer Price Index (CPI) for November 2024 is projected to drop to 4.7%, marking the lowest point since April 2018. This trend underscores a continuing pattern of disinflation, bolstered by a high base effect. The downward trajectory strengthens the argument for a potential interest rate cut by the Monetary Policy Committee in its upcoming meeting.

According to JS Global, the ongoing decline in inflation is highlighted by a significant drop in food inflation, which is expected to register at just 0.09% year-on-year in November 2024. This comes after a period where food inflation exceeded 27% the previous year. Core inflation is anticipated to reach 10.6% with a month-on-month increase of 150 basis points. The average CPI for the first five months of fiscal year 2025 is expected to be 7.9%, a substantial decrease from the 28.6% recorded in the same period of the previous fiscal year.

JS Research projects that the average CPI for fiscal year 2025 could be 8.4%. However, adjustments such as removing additional Petroleum Development Levy and normalizing milk price increases could further reduce this figure to around 7.0%. The declining inflationary pressures have already led to 12-month secondary market yields trading 230 basis points below the current policy rate of 15%, indicating market expectations for a rate cut.