This Saturday the inflation data for May will be known, since the National Administrative Department of Statistics (Dane) will present its report on the Consumer Price Index (CPI) for the fifth month of the year, and the different market players believe that the indicator could moderate, after it reached a level of 9.23% in its annual variation in April.
(Inflation is expected to moderate gradually from May).
in the last Financial Opinion Survey (EOF) of Fedesarrollo and the Colombian Stock Exchangethe general forecast of market analysts is at 9.1% for May.
On the other hand, according to the latest survey of expectations of the Bank of the Republic, in which 40 market players participated, including banks, stockbrokers, corporations, pension funds, universities, and others, the expectation of monthly inflation is 0.82%, with a minimum of 0.3% and a maximum of 1.12%.
THE FOOD
An element that could play into these figures is the food sector, which has precisely been the one that has led to the general rise in prices in recent months.
According to a report prepared by Juan Pablo Espinosa, director of economic research at Bancolombia, “The food category, which has been the main protagonist of the inflationary outbreak that has been experienced since the second half of 2021, is showing signs of moderation.”
(What is downsizing and how does it impact consumers).
The entity’s own calculations produced a scenario for food inflation for May with a monthly variation of 1.6%. “If materialized, this would be the lowest reading since December of last year”Spinoza said.
According to Bancolombia reviews, the change in trend is concentrated in a few products, which, however, have a high participation in the basket: potatoes, eggs, beef and, to a lesser extent, cheeses.
According to the bank’s analysis, this would be explained, in the case of potatoes, an earlier harvest in the main producing areas explains this evolution. in the eggs, “due to the increase in the encasing after the distortions generated by the loss of biological assets in the midst of the blockades of 2021.” For meat, the moderation would be attributable to the substitution of this product for other lower cost proteins.
From Bancolombia it is expected that In May, the CPI shows a variation of 0.9%, and the annual data would be 9.13%.
On the other hand, for Banco de Bogotá, the monthly forecast is 0.8%, with which inflation would drop to around 9%.
“The most recent information on the food component has been presenting a favorable behavior, with which the bias we have is downward, that is, it could be lower in that month, and that would help inflation to moderate a little more. compared to that 9.2% that we have at the moment”, said Camilo Pérez, manager of economic research at Banco de Bogotá.
BASE EFFECT
From Banco Itaú, the month-to-month forecast for May is 0.675, and for the annual figure it would be 8.88%, something that Carolina Monzón, manager of Economic Analysis at Itaú Colombia, says will be presented “given the high base of comparison a year ago”.
Monzón acknowledges that for the fifth month of the year an increase of 1.9% month-on-month in the food component is expected, which would contribute 20 basic points (bp) to the main figure. The growth in May in the item, according to the economist, would be pressured upwards by the prices of meat, eggs and bread, while fruits and vegetables would contain a greater advance.
(The ten products that rose the most in the first four months of 2022).
In the case of other sectors, Monzón assures that “The housing split would be a key driver for inflation this month. The upward pressure would come from the prices of leases and public services, both affected by the indexation process”, he explained.
It also expects that the hotel and restaurant division will also support the monthly advance “given the increase in food prices in recent months”, while the transport division “It would moderate in May, given a correction after Easter last month and the absence of fuel increases by the government.”
Another analyst who has a similar view is Sergio Olarte, chief economist at Scotiabank Colpatria. The entity has a forecast of monthly inflation for May at 0.84%, which would leave annual inflation at 9.06%.
“It is a little lower than last month in annual terms due to a statistical basis, since in May of last year it was the national unemployment and food had a very pronounced increase during that month in 2021, a little more than 5.3 %”assured.
According to Olarte, the CPI for food is expected to remain high, not as high as last year, but it would rise a little more than 2%.
From BBVA Research, on the other hand, a monthly variation of 0.80% and an annual variation of 9.01% is expected for May.
THE CLOSING OF THE YEAR
Expectations for the end of the year still perceive risks. Laura Peña, an economist at BBVA Research, highlighted that, for the remainder of the year, “The pressure of food will have a greater persistence than initially expected, with which it would moderate more slowly, in the second part of 2022”.
On the other hand, Scotibank Colpatria expects inflation to end the year at around 8.5%, Banco de Bogotá’s forecast is at 8.6% for December this yearwhile Itaú stands at a projection of 7.3%, with an upward bias given the difficulties in the global supply chains, and the rise in the prices of raw materials.
The Fedesarrollo Financial Opinion Survey forecasts that inflation will close at 8% this year, and the Banco de la República analysts’ survey estimates 8.42%.
LAURA LUCIA BECERRA ELEJALDE
TWITTER: @LAURAB_ELEJALDE
