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Food & non-alcoholic beverages pushed prices up in the month.
2024/03/01 | Julio Ruiz

CPI rose by 0.56% MoM in February (from 0.29% a year ago), above our 0.09% forecast and market consensus of 0.20% (as per Bloomberg). Upside pressure came mainly from food & non-alcoholic beverages (contribution of 23-bp), while housing CPI index also exerted upward pressure (11-bp) driven by fuel prices and an update in water tariffs. Core inflation (excluding energy and food items) stood at 0.51% MoM (from 0.27% a year ago). On an annual basis, headline inflation rebounded to 3.29% YoY in February (from 3.02% in January), while core inflation stood at 3.10% (from 2.86%). Headline and core inflation are now slightly above the upper bound of the 2+-1% tolerance range. 

At the margin, headline and core inflation also rebounded. The seasonally adjusted three-month annualized CPI came in at 4.69% in February (from 2.48% in January), while core inflation stood at 4.62% (from 2.66%). 


While inflation rebounded in February, most of the upside pressure came from volatile food items and core inflation stood slightly above the upper bound of the central bank's target range. Despite the surprise, we still expect inflation to end the at 2.8%. In this context and amid soft activity, we think the central bank is unlikely to pause its easing cycle in the near term. However, the expectation of a delay in the start of the easing cycle of the Fed may limit how low the policy rate could fall. Our end of year policy rate is at 5.00%, but with an upward bias.


Julio Ruiz