Our view: The headline is more pressured than expected and with a less constructive composition. The main highlight of the release is the acceleration of Food Away From Home, putting pressure on the Underlying Services metric, which favors keeping the Selic rate at 10.50% next week.
The May IPCA recorded an increase of 0.46% MoM, above our forecast (0.41%) and the market median (0.42%).
Compared to our forecast, the main surprises were concentrated in Food and Beverages, with Fresh Products under more pressure, especially in items affected by the rains in Rio Grande do Sul and Food Away from Home above our bullish scenario.
In Administered Prices, Gasoline, which had been registering very high numbers in recent releases, had its fall offset by a stronger number for Electricity, due to the readjustments applied in 6 capitals included in the IPCA between April and May. In Industrial Goods, the cooling of Personal Hygiene and Apparel was offset by a stronger variation in New Cars.
In Underlying Services, the higher number reflects the intense rise in Food Away From Home (+1bp), an item with the greatest weight in the group, putting pressure on both the original and seasonally adjusted metrics. It’s worth noting that, according to the FIPE data released today, this acceleration trajectory should continue for the June IPCA-15.
In terms of monetary policy, the more pressured headline and the worse Underlying Services number (above market expectations (of 0.33%), reinforce our view of maintaining the current interest rate level at the next COPOM meeting, since the more constructive current inflation scenario is weakened by today’s data.
The average of cores was 0.39%, above our forecast and accelerating about the May IPCA-15 (0.31%).
For more information, please check our IPCA Report.
