Consumer prices rose by 4.2% MoM in May (from 8.8% in April), below market expectations of 5.2%, according to the latest central bank’s survey. Thus, monthly inflation posted the lowest monthly reading since January 2022. Annualized quarterly inflation plummeted to 151.9% during the quarter ended in May, from 250.8% in April. The 12-month inflation reading rose to 276.4%, from 289.4% in April.
The monthly core measure decelerated further in May. The core index rose by 3.7% MoM (from 6.3% in the previous month), bringing the year-over-year reading to 277.3% in May 2024, from 292.2% in April. Prices for regulated products increased by 4.0% MoM and 323.6% YoY, led by electricity and fuel prices amid the removal of subsidies. Finally, prices for seasonal products increased by 7.2% MoM (from 9.9% in the previous month) and 217.0% YoY.
Our heatmap shows that 100% of selected items (taking the month-over-month readings) rose by single-digits in May, up from 83% in the previous month and only 8% in December 2023.
Our Take: The stabilization program continues to deliver better-than-expected results, with the currency appreciation and weaker consumption contributing to another sharp deceleration in monthly inflation. We recently lowered our inflation forecast to 140% for YE24 (from 160% previously).