Data release: 08/09/2022
The inflation data pointed to a deflation of 0.68% MoM, below the market expectations of -0.65%. The actual data turned out to be in line with our estimate of -0.67%.
Not only the headline, but also the breakdown of IPCA was better, displaying inflation cores with a significant decompression. The cooling off commodity prices in BRL and signals of reduced demand for industrial goods are the main factors that explain the decompression in the cores.
On the other hand, services inflation is still worrying, as both the inertia generated by past inflation and a tight labor market continue to put pressure on the group.
In our opinion the balance of the factors favors the expectation of an end to the cycle of monetary tightening.
