CPI inflation reached +0.3% MoM in May, in line with expectations

Summary

May’s CPI increased 0.3% MoM, in line with both our and the market’s consensus. As expected, the figure was driven by increases in the prices of foodstuffs, transportation (mainly fuels) and housing. With this print annual inflation increased to 4.7%, well above the central bank’s target of 3%, while accumulated inflation in 2014 reached 2.5%. Nonetheless core inflation increased by around 0.2% MoM showing an incipient moderation of inflation figures during 2H14. In this regard, we forecast June’s CPI inflation between 0.0/+0.1% MoM, with positive contributions from foodstuff and transportation. Finally, with the information at hand, we expect the central bank to maintain both rates at 4% and the dovish bias in June’s monetary policy meeting.

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