Emerging Markets: Brazil, Mexico and South Africa’s inflation in focus - TDS
9 December 2015, 06:50
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Research Team at TDS, lists down the key inflation releases from the emerging markets.
Key Quotes
“BRL: IPCA inflation for Nov is expected to be 10.4% Y/Y, up from 9.93% Y/Y in Oct. This data point will both be meaningful and old news as we look to 2016. Base effects from the acceleration in regulated prices from the outset of 2015 will drop out, and we estimate that inflation could fall to near 8.6% Y/Y by the end of Q1. The importance however is in the degree to which the central bank remains concerned with inflation momentum into the end of the year, and what this will do to inflation expectations, as the market is primed for hikes in January following the hawkish shift at the previous COPOM.
MXN: November inflation is expected to decelerate to 2.27% Y/Y from 2.48%, while core CPI is expected to stay generally flat at 2.26% Y/Y. Low fuel prices and falling telecom tariffs have more than offset the inflationary effects of the weak peso. This may not be overly important for Banxico given its Fed-dependency, but the inflation picture is benign with only PPI inflation sitting a bit firmer (with ex-oil and gas rising sharply), which may risk feeding through to the consumer level. However, with Banxico expected to follow the Fed and the rates market basically pricing this fact in, a softer inflation print isn’t going to matter much.
ZAR: November CPI inflation is expected to move up slightly to 4.8% Y/Y from a prior 4.7%. Core inflation is expected to remain unchanged at 5.2% Y/Y. It its most recent forecast the SARB expects headline inflation to average 4.6% in Q4, which looks slightly optimistic, before moving up to 6.4% in Q1 of next year largely due to base effects. Real retail sales growth is expected to continue to grow at a moderate pace in October, with the consensus looking for 2.5% Y/Y after a prior 2.7%.”
Key Quotes
“BRL: IPCA inflation for Nov is expected to be 10.4% Y/Y, up from 9.93% Y/Y in Oct. This data point will both be meaningful and old news as we look to 2016. Base effects from the acceleration in regulated prices from the outset of 2015 will drop out, and we estimate that inflation could fall to near 8.6% Y/Y by the end of Q1. The importance however is in the degree to which the central bank remains concerned with inflation momentum into the end of the year, and what this will do to inflation expectations, as the market is primed for hikes in January following the hawkish shift at the previous COPOM.
MXN: November inflation is expected to decelerate to 2.27% Y/Y from 2.48%, while core CPI is expected to stay generally flat at 2.26% Y/Y. Low fuel prices and falling telecom tariffs have more than offset the inflationary effects of the weak peso. This may not be overly important for Banxico given its Fed-dependency, but the inflation picture is benign with only PPI inflation sitting a bit firmer (with ex-oil and gas rising sharply), which may risk feeding through to the consumer level. However, with Banxico expected to follow the Fed and the rates market basically pricing this fact in, a softer inflation print isn’t going to matter much.
ZAR: November CPI inflation is expected to move up slightly to 4.8% Y/Y from a prior 4.7%. Core inflation is expected to remain unchanged at 5.2% Y/Y. It its most recent forecast the SARB expects headline inflation to average 4.6% in Q4, which looks slightly optimistic, before moving up to 6.4% in Q1 of next year largely due to base effects. Real retail sales growth is expected to continue to grow at a moderate pace in October, with the consensus looking for 2.5% Y/Y after a prior 2.7%.”
