Itaú BBA - IPCA climbed 0.75% in March and 1.51% in 1Q19

Macro Brazil

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IPCA climbed 0.75% in March and 1.51% in 1Q19

abril 10, 2019

The consumer price index IPCA climbed 0.75% in March, food consumed at home is behind the surprise.

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

 The consumer price index IPCA climbed 0.75% in March, printing significantly above our estimate and the median of market expectations (both at 0.63%). Costs for food consumed at home were behind the surprise, particularly beef, tomatoes and potatoes. Notwithstanding an elevated headline result for March, core inflation measures remain on a very comfortable path. For instance, the underlying service inflation indicator advanced 0.20% during the month and 3.3% yoy. We maintain our assessment that inflation is sustaining a benign dynamic and is subject to low risk of demand-side pressures. This outlook is also supported by inflationary inertia, anchored inflation expectations and substantial spare capacity in the economy. 

 Incorporating the latest report, the IPCA ended 1Q19 up by 1.51%. The year-over-year change accelerated to 4.58% from 3.89%. We revised our preliminary forecast for the IPCA in April to 0.57%, which would push the year-over-year change up to 4.94%. Our estimates for May and June are 0.34% and 0.18%, respectively. For the full year, our estimate remains at 3.6%. 


Julia Araujo
 

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



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