Itaú BBA - IPCA climbs 0.51% in November and 3.27% year-over-year

Macro Brazil

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IPCA climbs 0.51% in November and 3.27% year-over-year

diciembre 6, 2019

We expect the Copom to cut the Selic rate by 50 bps at next week’s meeting, to 4.5% p.a.


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

 

 The consumer price index IPCA climbed 0.51% in November, printing above our forecast and the median of market expectations (both at 0.47%). Food consumed at home delivered a noteworthy 1.01% hike (-0.03% in October), led by beef (+8.5%, topping our +6.7% estimate).

 Core inflation measures remain at comfortable levels. The core measure for underlying services advanced 0.13%, in line with our estimate, while its year-over-year change receded to 3.3% from 3.6% in October. 

 According to our forecasts, the IPCA will go up 0.74% in December and 0.32% in January. The December reading will be pressured by adjusted lottery tickets and the shock in beef prices. On the other hand, core inflation core measures should remain at comfortable levels, with no signs of acceleration. The output gap and inflation itself – in the form of inertia or anchored expectations — support this scenario. We expect the IPCA to rise about 3.9% in 2019, thus below the inflation target (4.25%).

 

Julia Passabom


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



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