2025/08/04 | Andrés Pérez M., Diego Ciongo & Soledad Castagna
CPI in July rose by 0.4% MoM, above our forecast and the market consensus (0.1%), according to the BCP survey. On a monthly basis, increases in food goods such as fruits and vegetables (4.1% MoM), seasonal services such as tourism packages (18.8% MoM) and fuel (2.3% MoM) stand out, offset by decreases in some imported durable goods amid the recent appreciation of the PYG. The core CPI X1 (which excludes fruits and vegetables, regulated service prices and fuel) remains stable in July (0.0% MoM) down from 0.2% a year ago.
On an annual basis, headline inflation rose to 4.3% in July (up from 4.0% in June), while the Core X1 CPI stood at 5.6% (down from 5.8% in the previous month). We note that headline inflation on an annual basis remains within the tolerance range of the BCP’s inflation target (3.5% +/- 2%), while core X1 is slightly above the tolerance range.
At the margin, headline accelerated in July, while core inflation decelerated in July. Using our own seasonally adjusted figures, the three-month annualized headline inflation reading rose to 4.4% in July (from 2.9% in June), while core inflation fell to 3.8% (from 5.7% in the previous month).
Our heat map shows that 50% of the items are below the central bank's inflation target of 3.5%, up from 42% in June 2025, but still lower than the end-2024 data (58%)
Our take: Our inflation forecast stands at 4.0% for YE25, now with upside risks due to the higher-than-expected print in July. The recent appreciation of the PYG should moderate pressure on tradable prices, while lower commodity prices, particularly oil prices, will also play a key role in the remainder of the year. The next monthly monetary policy meeting will be held on August 22, while the CPI for August will see the light on September 2.