Summary
The January IPCA-15 registered a 0.55% MoM increase, above the median of the survey of economists consulted by Bloomberg (0.51% MoM) and our forecast (0.54% MoM).
Despite the stronger headline, we highlight that underlying services continue to decelerate, and the slowdown of this group in the following months will be benefited from the falling inflation over 12 months and the tightening monetary policy. The total services group accelerated at the margin, but we understand that this was related to one-off factors, which do not influence forward-looking monetary policy.
Industrial goods decelerate at the margin in January. In our view, this process will continue in the coming months, due to core producer prices deflation and the global economic activity slowdown, which tends to moderate major commodity prices, except oil.
We expect a 2023 inflation advance of 5.5%. This forecast already includes the gasoline adjustment announced by Petrobras (+17 bps) on 01/24 and a strong variation of the “License plate” item (+25 bps). Despite those impacts, we believe that the more favorable dynamics of underlying services, and the food group (which showed an advance below seasonality in almost all items), will contribute to a faster-than-expected Brazilian inflation deceleration.
