Itaú BBA - IPCA climbs 0.21% in January and reaches 4.19% year-over-year

Macro Brazil

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IPCA climbs 0.21% in January and reaches 4.19% year-over-year

febrero 7, 2020

IPCA below expectations in January


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

 

 The consumer price index IPCA climbed 0.21% in January, printing below our forecast (0.33%) and the median of market expectations (0.35%). Beef and personal care items were behind the difference from our call, experiencing sharper deflation than we anticipated: -4.9% for beef (our estimate: -3.0%) and -2.1% for personal care products (our estimate: -0.1%). Importantly, this is the first IPCA report featuring the new weighting structure of the index (based on the 2017-2018 Household Budget Survey - POF).

 Core inflation measures remain at comfortable levels. The measure for underlying industrial goods showed 0.50% deflation (below our estimate and explained by the price decline for personal care items). Underlying service inflation went up 0.56% in January. 

 According to our forecasts, the IPCA will go up 0.17% in February, 0.12% in March, and 0.33% in April. Upcoming results will show relief in food prices (particularly beef), and energy prices, electricity tariffs (tariff flag system in green mode in February and March) and fuel (after Petrobras implemented price cuts at its refineries).    

 We expect the IPCA to rise 3.3% in 2020, for now.

 

Julia Passabom


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



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