Inflation is expected to decline further to 19.0% year-on-year in September 2024, IC Research has predicted.

However, it expects month-on-month inflation to rise to 0.7%.

“For September 2024, we expect further decline in headline inflation to 19.0% year-on-year while the month-on-month rate rises to 0.7%”.

Headline inflation surprisingly declined by 50 basis point to 20.4% in August 2024 against IC Research expected uptick to 21.8% and the market’s expectation of a rise to 22.8%.

On a month-on-month basis, the Consumer Price Index data showed a decline in actual prices between July 2024 and August 2024 with a deflation of 0.7% month-on-month on the back of a 2.2% month-on-month food price deflation.

“Our main surprise relates to the month-on-month contraction in the CPI level, which we historically expected to occur in September, although recent data suggest a steady shift in these seasonal contractions to August. We note that the CPI contraction was aided by an unexpected year-on-year deflation for three moderately-weighted food items which tamed the year-on-year rise in the CPI level in August 2024”.

The latest disinflation represented the 5th consecutive month of decline in annual inflation and drags the headline rate to its lowest level since March 2022.

“With emerging tailwinds from lower energy prices, improving FX stability and the calming impact of fish and vegetables harvest, we foresee scope for further disinflation ahead, barring other food price shocks and election related spike in demand pressures”, IC Securities added.