Colombia Macro Flash: Inflation Stood at 0.30% in May

Munir Jalil - Citi
June 6, 2012 1:10 AM GMT
Announced: Tuesday, June 5 at 8:00 p.m. NYT Actual: 0.30% month over month (3.44% year over year). Previous: 0.14% month over month. Consensus: 0.20% month over month. Citi: 0.19% month over month (3.32% year over year). Bottom Line Inflation stood at a monthly 0.30% in May, a print above both market consensus and our own in-house expectations, bringing the yearly figure to 3.44%, technically flat from the 3.43% print observed in April. On a year-to-date basis inflation now stands at 1.92%. Food inflation increased at a monthly 0.50%, led mainly by processed food prices. In this category, the price of rice was the main driver with a 9.75%MoM increase. Nonetheless, this result brought yearly food inflation down to 4.72% from 5.01% before. Non-food inflation, on the other hand, stood at 0.22% on a monthly basis, which implies the yearly figure stood at 2.94%, 13bp up from a month ago. Core inflation was mainly affected by increases in the price of electric energy, which stood at 2.23%MoM. Key Points May's inflation surprise was the result of higher-than-expected price increases in rice and electric energy prices. Given the transitory nature of these shocks, we do not foresee any mayor changes in year-end inflation expectations. While this inflation result might have some impact upon the local curve, we think the main driver for the TES market should be Repo rate expectations, which in turn should depend on the evolution of the external economic outlook.

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