Itaú BBA - IPCA-15 climbs 0.72% in April, while core measures continue to show a benign trajectory

Macro Brazil

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IPCA-15 climbs 0.72% in April, while core measures continue to show a benign trajectory

abril 25, 2019

IPCA-15 climbs 0.72% in April, while core measures continue to show a benign trajectory

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

 The IPCA-15 increased 0.72% in April, slightly above our forecast (0.69%) and the median market expectations (0.67%). The result in the month was pressured by the increase in food consumed at home and transportation prices, with a highlight to gasoline. The behavior of core inflation measures, however, continues to show a comfortable trajectory. The underlying core services, for example, increased 0.21% mom and 3.6% yoy. We maintain our assessment that inflation continues to show rather benign dynamics, despite the pressure caused by volatile items in the short term. There is low risk of inflationary pressures on the demand side. In addition, inflationary inertia remains low, inflation expectations are anchored and spare capacity in the economy remains high.

 With the result released today, the IPCA-15 posts a 4.71% year-over-year change. We revised our forecast for the headline IPCA in April from 0.59% to 0.61%. With this result, the year-over-year rate will likely accelerate to 4.98%. Our forecasts for May and June are at 0.27% and 0.42%, respectively.


Julia Araujo
 

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



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