Rising food prices push up inflation

May inflation again surprised the market with a monthly change of 0.48% and an annual rate of 2.93%, exceeding the median forecasts for fourth straight month. Thus, during the first five months of 2014, cumulative inflation reached 2.48%, up from 2.2% and 1.49% in the same periods of 2012 and 2013. Food, which registered a monthly variation of 1.2%, contributed 0.33 percentage points (pp) to the total variation; tubers (potatoes), meat and vegetables (onions) drove growth in this group. Entertainment, meanwhile, registered a monthly growth of 2.3%, contributing 0.06 pp to the monthly variation. Thus, Food and Entertainment contributed 0.39 pp to the monthly growth of 0.48%. On the other hand, core inflation continue to grow for the sixth consecutive month standing at 2.78% YoY, just shy of the headline inflation rate (2.93%). Rising core inflation pressures and the forthcoming increases in electricity prices are expected to drive inflation toward our forecast of 3.4% for 2014.

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