Consumer prices rose by 0.27% mom in November, above the Bloomberg market consensus of 0.20%, but closer to our 0.29% call. The main positive contributors of the month were housing and utilities (+0.29% mom; +9bps), entertainment (+1.68% mom; +5bps) and restaurants and hotels (+0.35% mom; +4bps). Entertainment and food prices explained most of the surprise relative to our forecast. Consumer prices excluding food increased 0.31% mom (+0.69% mom one year earlier), while inflation excluding food and energy rose by 0.32%mom (core; 0.33% one year earlier). Overall, annual headline inflation fell by 21bps from October to 5.2%, while core inflation dropped by a mild 1bps to 5.95% (vs.10.60% peak in April last year). The November inflation figure is key in the beginning of the discussions on next year's minimum wage increase.
Services inflation remained elevated. Non-durable goods inflation (mainly food) came in at 3.26% yoy, dropping 56bps from the previous month. Meanwhile, energy inflation fell to 5.5%, a drop of 418bps from October. Durable goods inflation remained in negative territory at -3.65%, but increased 81bp from October. Services inflation dropped by 7bps to a still high 7.68% (9.51% peak in September). At the margin, we estimate that inflation accumulated in the quarter was 4.2% (SA, annualized; 3.6% in 3Q24). Core inflation increased to 6.3% from 5.2 in 3Q24 (SA annualized).
Our take: The disinflationary process continues, but more slowly than anticipated by the market. Our preliminary estimate for December’s CPI, to be released on January 9, is between 0.3% and 0.4%, resulting in annual inflation falling to 5.1%. Although the disinflationary process continues, sequential pressures have edged up, meanwhile domestic fiscal noise, weak currency dynamics and tight global financial conditions set a high bar for BanRep to accelerate the pace of cuts at the next monetary policy meeting on December 20.
