Itaú BBA - IPCA-15 falls 0.59% in May and is up by 1.96% yoy

Macro Brazil

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IPCA-15 falls 0.59% in May and is up by 1.96% yoy

mayo 26, 2020

Lower prices for fuel and airline tickets contributed to the deflation in the month. Core inflation measures remain low.


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

 The mid-month consumer price index IPCA-15 showed a 0.59% deflation in May, printing close to our estimate (-0.56%) and below market expectations (-0.48%).  Drops in fuel prices (-8.5%) and airfares (-27.1%) were worthy of note.

 Core inflation measures remain low and are slowing down at the margin. Underlying inflation in industrial items fell 0.09% in today’s report, while the year-over-year change slid to 0.5% from 0.8%. Underlying service inflation also decelerated to 2.8% from 3.2% using the same metric. 

 The next readings for the headline IPCA will likely stay low. We expect deflation of 0.42% in May and a 0.19% increase in June. We expect the IPCA to advance 2.0% in 2020 and 3.0% in 2021. 
 

Julia Passabom


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



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