Fynsa
"April, a thousand showers," goes the saying. However, during the month there was not much, if any, rainfall over the capital. The nostalgic will say that things are not like they used to be. What is also not like before are the high CPI variations for the month, after the data we learned during the week.
Indeed, the National Statistics Institute (INE) reported that the CPI for April increased 0.2% with respect to the previous month, below our and the market's estimates of 0.3%. Thus, the year-on-year variation decreased from 4.9% to 4.5%. On this occasion, the largest positive incidences were observed in the Miscellaneous Goods and Services division, followed by Housing and Health, which was partially offset by declines in Apparel and Footwear, Food and Transportation.
In any case, although the aggregate indicator was not as high as expected -or as is usual for the month-, the underlying indicator came a little closer. As a result, the non-volatile CPI registered a monthly increase of 0.4%, which caused it to drop year-on-year from 3.7% to 3.5%. Going a bit further, disaggregating, the non-volatile CPI for services showed a monthly increase of 0.4%, remaining at 4.2% year-over-year, while that for goods rose 0.5% versus March, although it moderated its year-over-year variation from 2.9% to 2.7%.
Although we have been insistent with this, every time we have new data it is good to check if there is evidence of inflationary pressures. If we look at the diffusion index, this would not be the case, since it reached 50% -below the historical average for the month-, lower than in recent April and the lowest of the year. However, seasonally this should not be a novelty, given the high percentage of goods that typically increase during the first three months of the year.
What to expect going forward? We preliminarily estimate a monthly increase between 0.1% and 0.2% for May, which would bring the annual change to 4.3%. We maintain our year-end projection at 4.0%. Finally, with this data, the Central Bank should not modify its strategy of maintaining the TPM, at least for the short term.
