Weekly Economic Update: Focus on Argentina, Brazil, Colombia, and Peru

This week, markets are abuzz as Argentina, Brazil, and Colombia unveil their May 2024 Consumer Price Index (CPI) figures.

Additionally, Peru will decide on interest rates, marking a pivotal moment for investors and policymakers alike.

In Argentina, expectations lean towards a continuing slowdown in inflation, which has shown a downward trend for five months straight, now estimated at 6.0%.

This trend reflects a dip in consumer spending and the sluggish pace of the peso, which helps contain prices of tradable goods.

However, lingering challenges prevent any further easing of interest rates, especially with the country’s currency showing vulnerability.

Brazil presents a contrasting scenario where inflation rates are climbing, anticipated at 3.92% annually.

Despite this uptick, core inflation remains stable, hinting at a controlled economic environment.

These numbers suggest slight deviations from the central bank’s target, influenced by a balance of monitored indicators.

Colombia also shows promising signs with a forecasted decline in both general and core inflation rates to 7.07% annually, suggesting relief is on the horizon.

This expected decrease stems from diminishing environmental risks and a general decline in last month’s figures.

As a response, the central bank is likely to continue its rate-cutting strategy, aiming to bolster economic growth.

Peru’s central bank prepares to cut its key rate from 5.75% to 5.5% amid easing inflation and stagnant growth.

This significant policy shift follows a total reduction of 225 basis points, highlighting a cautious yet proactive strategy.

These events showcase Latin America’s economic shifts driven by inflation and policy amidst global factors.

Their results impact local markets and reveal emerging economies’ resilience in a dynamic world.

Economic Events of the Week by Country and Day:

Argentina

• On Thursday, June 13, the May 2024 CPI will reveal a fifth month of slowing inflation to 6.0%.
• A significant consumption drop, Milei’s tenure, slow peso progress, and delayed price regulation adjustments drive this forecast.

Brazil

• On Tuesday, June 11, the CPI for May 2024 will be announced. Analysts predict that consumer prices in Brazil rose in May at a rate consistent with mid-month readings, reaching 3.92% year-on-year.

Colombia

• On Tuesday, June 11, May 2024 CPI may drop to 7.07% year-on-year from 7.16% in April, above the 3% target.
• On Friday, June 14, analysts expect April 2024 retail sales to rise by 1.4% year-on-year, following declines in March and February.
• The same day, analysts will release April 2024 industrial production data, potentially showing a 7.6% year-on-year increase, overcoming March’s seasonal drawbacks.

Peru

• On Thursday, June 13, the Central Bank’s Monetary Policy Meeting is expected to lower the reference rate from 5.75% to 5.5%.
• This adjustment totals a 225 basis point easing this cycle after 25 basis point cuts in May and April.

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