Inflation Forecast 1h – Dec

We expect headline inflation in the first half of December to come in at 0.24% bw, amid lower pressures in agricultural products and a normalization following the “El Buen Fin” discounts.

Typically, inflation in the first half of December stands at around 0.38% bw. Our lower estimate reflects softer pressures in both the core and non-core components.

Within the core component, we expect an increase of 0.41% bw (vs. 0.43% bw historical). This slightly below-average reading reflects lower pressures in the goods subcomponent, which is expected to rise 0.34% bw (vs. 0.42% bw historical). This behavior is mainly explained by a seasonal effect, as prices typically rebound in the first half of December following the “El Buen Fin” discounts; in this case, that rebound appears to have largely materialized during the second half of November.

Meanwhile, in the non-core component we expect a decline of -0.34% bw (vs. 0.19% bw historical), driven mainly by a drop in fruit and vegetable prices, which continue to benefit from favorable rainfall conditions throughout the year.

With this, annual headline inflation would decline from 3.99% to 3.80% due to a base effect; core inflation would ease from 4.54% to 4.44%, while noncore inflation would decrease from 2.18% to 1.67%.