Julio Ruiz
1/03/2023
CPI surprised to the downside for the second consecutive month in February, suggesting a lower-than-expected effect on prices from supply disruptions due to protests. CPI grew 0.29% mom in February, below our forecast of 0.34% and market consensus of 0.44% (as per Bloomberg) but still above the 5-year median of 0.14%. The main upward pressure came from food prices (contribution of 15-bp to headline CPI), likely associated to protests. Restaurants & hotels (9-bp) and education (6-bp) also exerted relevant upward pressure, with the latter associated to a seasonal adjustment in tuition. In contrast, housing CPI contributed negatively to headline inflation with 10-bp, dragged by a downward adjustment in electricity tariffs. On an annual basis, headline inflation stood at 8.65% in February (practically unchanged from January), while core inflation (excluding energy and food items) increased to 5.87% (from 5.80%).
At the margin, core inflation rebounded in February. The seasonally adjusted three-month annualized variation of the CPI came in at 6.58% in February (from 7.09% in January), while core inflation (excluding food and energy items) increased to 4.34% (from 4.07%).
A lower-than-expected effect on inflation from supply disruptions due to protests is likely to bring some relief to the central bank (BCRP), keeping the policy rate unchanged at 7.75% in next week’s meeting. However, the BCRP will likely keep the doors open for further rate adjustments considering the uncertain inflation outlook.
Julio Ruiz