2026/07/03 | Diego Ciongo & Soledad Castagna
Inflation rose 0.37% MoM in June (from -0.09% a year ago and above the five-year median of 0.21%), coming in slightly below both our forecast and the BCU survey median, which stood at 0.5% MoM. The monthly increase was mainly driven by Transportation, which rose 2.04% MoM (contributing 0.22 p.p. to headline inflation), largely due to higher domestic fuel prices. Food and Non-Alcoholic Beverages increased 0.13% MoM (contributing 0.03 p.p.), reflecting higher vegetable prices (+4.77% MoM), partially offset by lower fruit prices (-2.37% MoM). Meanwhile, Restaurants and Accommodation Services rose 0.33% MoM (contribution: 0.03 p.p.), as increases in restaurant prices more than offset declines in hotel rates. Finally, Personal Care, Social Protection and Miscellaneous Goods and Services increased 0.61% MoM, contributing 0.03 p.p. to monthly inflation.
Core inflation decelerated, while headline inflation accelerated in year-over-year terms. All key CPI measures remain within the BCU’s target range of 4.5% ± 1.5 p.p. Headline inflation rose to 4.25% YoY in June, up from 3.77% in May. In contrast, core inflation edged down to 3.83% YoY (from 3.86% previously), while CPI CE VFCTA eased to 3.56% YoY, from 3.61% in May. For further details on inflation measures, see the table below. **For more details and measures see the table below.
At the margin, headline inflation accelerated, while core measures moderated in June. Based on our seasonally adjusted estimates, three-month annualized headline inflation increased to 7.3% in June, from 6.0% in May. By contrast, core inflation decelerated to 4.1%, from 4.7% in the previous month. Similarly, CPI CE VFCTA fell to 4.1%, down from 5.7% in May.
Our CPI heatmap shows that 54% of selected items are currently growing below the central bank’s 4.5% inflation target, down from 62% in the previous month but the same figures recorded in June 2025.
Our Take: We maintain our YE26 inflation forecast at 4.9%. While fuel prices have recently begun to decline, we continue to see upside risks stemming from weather-related factors associated with El Niño, particularly through their potential impact on food prices. July CPI will be released on August 3. On the monetary policy front, we expect the policy rate to rise to 6.25% by end-2026, particularly if a stronger U.S. dollar, a more restrictive Fed stance, or renewed exchange-rate pressures result in a less favorable inflation backdrop.