Headline CPI increased 0.63% bw/bw in 1H November, broadly in line with market consensus of 0.60% (as per Bloomberg) and below our forecast of 0.69%. The headline figure reflects the seasonal removal of the subsidy to electricity tariffs and higher egg prices in the non-core index. Core inflation, at 0.20% bw/bw, was also broadly in line with market consensus of 0.21% (same as our forecast). Annual headline inflation rebounded to 4.32% in 1H November (from 4.25% in 2H October) driven mainly by the non-core index (1.41%, from 0.64%). Core annual inflation eased further to 5.31% in 1H November (from 5.46% in 2H October), aided mainly by core goods CPI (5.32%, from 5.55%), while core services annual inflation eased at a slower pace (5.28%, from 5.35%). At the margin, assuming bi-weekly inflation in line with the five-year median in the second half of November, the seasonally adjusted three-month annualized headline inflation stood at 5.13% in November (from 5.68% in October), while core inflation stood at 5.37% (from 4.64%).
Our take: Our 2023 yearend inflation forecast still stands at 4.6%. The recent change in the tone of the monetary policy statement suggest the first rate cut is likely in 1Q24. However, today’s inflation figure doesn’t give a clear view if it would be in February or March, in our view. For now, we think the latter is a higher odds scenario.
