Itaú BBA - IPCA-15 climbed 1.11% in June, topping the median of market estimates

Macro Brazil

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IPCA-15 climbed 1.11% in June, topping the median of market estimates

June 21, 2018

Our preliminary forecast for the headline IPCA in June points to an increase of 1.37%.

For the version with all charts and tables, please open the attached pdf file 

The mid-month consumer price index IPCA-15 climbed 1.11% in June, above our estimate (1.01%) and the median of market expectations (1.00%). Food prices were behind the biggest deviation from our forecast. The index increased 0.14% in May and 0.16% in June 2017. Year-to-date inflation reached 2.35%, while the year-over-year change accelerated to 3.68% from 2.70% in May. According to census bureau IBGE, the 1.11% increase was the highest for June since 1995. Food and beverages (0.38 p.p.), transportation (0.36 p.p.), and housing (0.27 p.p.) provided the largest upward contributions during the month. In our view, a significant share of the pressure on food and fuel prices was caused by the effects of the stoppage of cargo transportation on the distribution of these items. As for housing, electricity bills were impacted by the activation of red mode (level 2) in the tariff flag system early in the month.  Our preliminary forecast for the headline IPCA in June points to an increase of 1.37%. As the IPCA registered 0.23% deflation one year earlier, the year-over-year rate is set to pick up to 4.50% from 2.86% in May.

Elson Teles
Economist

 

For the version with all charts and tables, please open the attached pdf file 



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