June 17, 2025/InvestmentOne Report

During May 2025, headline inflation decelerated both year-on-year (YoY) and month-on-month (MoM), driven by a mix of statistical base effects, softer food price trends, and moderated core inflation. Year-on-year, inflation declined by 74bps, easing to 22.97% in May from 23.71% in April, marking the second straight monthly decline, reflecting the impact of a higher comparison base following CPI rebasing and continued moderation in food inflation from 21.26% to 21.14% YoY and core inflation from 23.39% to 22.28% YoY. 

Looking ahead, we expect a continued but gradual moderation in annual inflation through the remainder of 2025, driven primarily by base effects from the exceptionally high inflation levels recorded in mid-2024.

That said, monthly inflation remains vulnerable to upside pressure, particularly from food and transportation, as the planting season unfolds and global oil prices remain unpredictable. On current projections, we anticipate headline inflation to end the year in the 16.00% 18.00% range, aided by favorable comparisons and the effects of CPI rebasing.

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