2025/12/02 | Diego Ciongo & Soledad Castagna
Inflation rose by 0.14% MoM in November (from +0.36 a year ago and a 5-year median of +0.19%). The print was below our forecast and market expectations according to the BCU’s survey (both at 0.30% MoM). The main monthly impact in November came from transport (0.65% MoM, incidence of 0.07 p.p.) given higher taxi and uber (among other) tariffs and greater airfare prices. Restaurant and hotel prices rose by 0.46% MoM (incidence of 0.04 p.p.). On the other hand, food and non-alcoholic beverages prices fell by 0.23% MoM (incidence -0.06 p.p.) due to vegetable prices (-5.62% MoM).
Core inflation (CPI CE VFC) (excluding fruits & vegetables and fuel prices) increased by 0.28% MoM, from 0.59% MoM in November 2024. The CPI-CE VFCTA, which excludes almost 26% of the general basket (fruits and vegetables, fuels, and centrally priced or administered products) rose by 0.30% MoM, from 0.69% MoM in the same month one year ago.
All CPI readings remain within the Central Bank's tolerance range of 4.5% ± 1.5%. Headline inflation fell to 4.09% YoY in November from 4.32% in October, while the core reading decreased to 4.38% from 4.69% in the previous month. The CPI-CEVFCTA fell to 4.31% YoY, from 4.72% YoY in October. Cumulative headline inflation in the year reaches 3.74%.
At the margin, inflation showed mixed results in November. Using our seasonally adjusted figures, the three-month annualized headline inflation rose to 4.1% in November (from 3.6% in October), while core inflation rose to 3.8% YoY from 3.4% YoY. Finally, the CPI-CE VFCTA reading remained unchanged at 3.2% YoY.
Our CPI heatmap shows that 54% of selected items are below the central bank’s target (4.5%), above the previous month (38%), and much better than December 2024 figures (15%).
Our take: Our inflation forecast for YE25 stands at 3.9%. Our forecast for December CPI will depend on the application of the seasonal electricity discount called UTE Premia, which is still under discussion. December’s CPI will be released on January 5, while the next monetary policy meeting is scheduled for December 23, in which we expect the BCU to cut the policy rate by 25-bps to 7.75%.