CPI fell by 0.15% mom in June (from 1.19% a year ago), above our forecast of 0.19% and market consensus of 0.20% (as per Bloomberg). Downside pressure to the headline figure came mainly from food (contribution of -31-bp) and transportation (contribution of -4-bps) CPI subindexes, with the latter aided by lower fuel prices. On an annual basis, headline inflation fell to 6.46% in June (from 7.89% in May), while core inflation (excluding energy and food items) stood at 4.35% (from 5.11%).
At the margin, headline and core inflation eased. The seasonally adjusted three-month annualized variation of the CPI came in at 4.03% in June (from 7.05% in May), while core inflation (excluding food and energy items) stood at 1.86% (from 2.81%).
In our view, lower inflation is consistent with the BCRP starting its easing cycle in 4Q23. We expect the central bank to cut its policy rate by 25-bp in each of the last three meetings of the year, reaching a level of 7.00%.