CPI in June was flat from May (0.0% MoM), in line with our forecast (0.0%) and below the market consensus (0.2%), according to the BCP survey. In the monthly behavior, the increases in goods such as fuel (3.2% MoM), clothing (0.34% MoM) and certain services (0.1% MoM) stand out, offset by decreases in food goods such as fruits and vegetables (-4.8% MoM) and meat (-1.3% MoM), as well as some imported durable goods. The Core CPI X1 (which excludes fruits and vegetables, regulated service prices and fuel) remained flat from May, (0.0% MoM) down from 0.1% a year ago. On an annual basis, headline inflation rose to 4.0% in June (up from 3.6% in May), while the Core X1 CPI stood at 5.8% (from 5.9% in the previous month). We note that headline inflation on an annual basis remains within the tolerance range of the BCP’s inflation target (3.5% +/- 2%), while core X1 is slightly above the tolerance range.
At the margin, the headline and the core inflation decelerated in June. Using our own seasonally adjusted figures, the three-month annualized headline inflation reading fell to 2.8% in June (from 5.1% in May), while core inflation fell to 5.9% (from 7.2% in the previous month).
Our heat map shows that 42% of the items are below the central bank's inflation target of 3.5%, down from 50% in May 2025, and still lower than the end-2024 data (58%).
Our take: Our inflation forecast stands at 4.0% for YE25. Even though inflation in the year through June reached 3.0%, the recent appreciation of the PYG should moderate pressure on tradable prices, while lower commodity prices, particularly oil prices, will also play a key role in during the remainder of the year. The next monthly monetary policy meeting will be held on July 22, while the CPI for July will see the light on August 4.