The annual CPI inflation rate continued to drop in May to 2.26% (from 2.68% in April), while in June it went up to 2.58%, amid base effects and the resumed pick-up in the oil price.
Compared to the 3.05% level reported at the end of the first quarter, the annual inflation rate followed a downward path – slightly steeper than projected –, owing to the markedly larger decline in fuel prices in annual terms, the central bank said.
The central bank expects the annual inflation rate will increase slightly in July as well, after which it is expected to remain relatively stable in the upper half of the variation band of the target (1.5%-3.5%) until the end of this year, before declining and hovering moderately around the mid-point of the target amid the lagged action of disinflationary effects from the aggregate demand deficit.
The uncertainty surrounding the new macroeconomic projections continues to be extremely elevated in the current environment, triggering two-way risks to the inflation outlook over the projection horizon. Their major source remains, at least in the short run, the coronavirus pandemic – which has resurged of late – and the associated containment measures that weigh on the speed and path of economic recovery, the government’s support programs and the central bank’s monetary policy measures notwithstanding.