2026/07/02 | Diego Ciongo & Soledad Castagna
CPI declined 0.3% MoM in June, coming in below both our forecast (0.0%) and market expectations (0.2%). The lower-than-expected print was primarily explained by falling prices for fruits and vegetables (-5.4% MoM), meat (-0.4% MoM), and fuels (-0.3% MoM). Durable goods prices also decreased (-0.5% MoM), likely supported by the stronger PYG. Meanwhile, services inflation remained positive (+0.2% MoM), partially mitigating the downward pressure from goods components.
Underlying inflation measures also softened. CPI X1 (which excludes fruits and vegetables, regulated services, and fuels) declined 0.1% MoM, pointing to a moderation in underlying inflationary pressures and suggesting that the disinflation process has become more broad-based.
On an annual basis, headline inflation eased to 2.1% YoY in June, from 2.4% in May, mainly reflecting lower fuel prices. Core X1 inflation also moderated, reaching 1.1% YoY from 1.2% in the previous month. Headline inflation remains towards the bottom half of the target's tolerance range (3.5% ± 2 p.p.), while both core X1 inflation and core inflation excluding food and energy (CPISAE) stood at 1.1% YoY, have drifted slightly below the lower bound. The persistently subdued behavior of core measures reinforces the view that underlying inflation pressures remain well contained.
On a seasonally adjusted basis, three-month annualized headline inflation fell to 3.1%, from 4.4% in May. Core inflation momentum remained unchanged at 0.1%, highlighting the absence of generalized price pressures. Meanwhile, three-month annualized core inflation excluding food and energy (CPISAE) increased to 0.58%, from 0.12% in May, although it remains at historically low levels.
Our take: The June inflation print strengthens the case for a benign inflation outlook in the coming quarters. Our year-end inflation forecast stands at 4.0%, although recent inflation surprises and the continued weakness in core measures point to significant downside risks. We continue to expect the policy rate to remain unchanged at 5.5% throughout 2026, supported by subdued core inflation dynamics. The July CPI release is scheduled for August 3.