We forecast a decline in headline inflation rate (YoY) to 18.3%, the first change in the YoY direction in 14 months. If our forecast is correct, this will be a 0.18% decline from November’s inflation rate.
This is the first time that headline and month-on month inflation will switch trajectories. This can be attributed to waning base year effects. However, we do not expect this development in the monthly rate to be a permanent one.
The change in direction is what the fiscalists and doves in the monetary policy committee need to support arguments for an accommodative monetary policy stance to complement the fiscal stimulus.
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