SEIDO Flash Report: (un) Frozen prices.Early signals of inflation acceleration. After 6 weeks of very low printings (< 0.5% WoW), inflation accelerated in the last two weeks to 0.9% and 0.75% WoW. The monthly inflation rate accelerated again, to 1.5% (vs 1% MoM of the previous week). Still early to know if this is a shift in the deflation trends, but yellow lights are flashing
General Core and F&B
Inflation is unfreezing sooner than expected. The weekly inflation rate is returning to pre-lockdown levels, while the monthly rate is rebounding from minimums. With regulated price incidence being minimal (now including the freezing of internet, cellphone and tv services), we believe this acceleration can be explained by: (1) some pass-through from the official FX depreciation (average of 4% in April); (2) relative price adjustments, as lockdown restrictions were removed from different sectors. In this regard, the distribution of price changes has shifted again, now in favor of price increases.
Food and Beverages explain the most acceleration. F&B weekly variation accelerated for the second week in a row, from 0.83% WoW to 1.25% WoW. It should be noted that average weekly inflation between March 23rd (when the lockdown began) and May 4th (before the recent acceleration) was of 0.25% WoW. The monthly variation stood at 0.6% MoM, vs 0.2% MoM of the previous week.
Our own data shows a shift in the distribution of price changes. For the last couple of weeks, items with price reductions have reduced their incidence, from 45% to 21%. Oppositely, items with less than 1% price increase gained more relevance, as participation moved from 20% to 34%. The share of items with price increases between 1-4% also went up recently.