Itaú BBA - IPCA-15 rises 0.08% MoM in August and 3.22% YoY

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IPCA-15 rises 0.08% MoM in August and 3.22% YoY

August 22, 2019

IPCA-15 rises 0.08% in August. Core measures remain on a benign path


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

• The mid-month consumer price index IPCA-15 rose 0.08% in August, printing close to our estimate (0.11%) and the bottom of market expectations (0.10%, median at 0.16%). Greater deflation in food consumed at home was behind the deviation from our call.

• Core inflation measures remain at comfortable levels.  The core measure for underlying industrial prices and services (IPCA EX-3), for instance, went up slightly by 0.05%, in line with our estimate, and its year-over-year increase slowed to 2.7% from 3.0%. We thus maintain our assessment that the two main factors supporting our scenario — a wide output gap and inflation itself, in the form of inertia or anchored expectations — continue to suggest comfortable inflation dynamics.

• After the release of today's report, we revised our estimate for the headline IPCA in August to 0.13% (0.16% previously). We forecast increases of 0.10% in September and 0.07% in October. Importantly, we assume that the tariff flag system in electricity bills will remain in red mode level 1 in September and switch back to yellow mode in October. For the time being, our full-year estimates are 3.6% for both 2019 and 2020.
 

Julia P. Araujo

 

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



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