Inflation drops to lowest level since April 2021 in April

Inflation drops to lowest level since April 2021 in April

Latest reading:

Latest reading: Inflation came in at 47.3% in April, down from March’s 55.9%. April's result represented the weakest inflation rate since April 2021. The moderation was driven by slower growth across a host of subsectors. Since peaking at close to 300% in early 2024, inflation has since tumbled thanks to a softer rate of currency depreciation, tight fiscal policy and market liberalization measures. In addition, the trend pointed down, with annual average inflation coming in at 128.9% in April (March: 149.8%). Finally, consumer prices increased 2.78% over the previous month in April, a smaller increase than March's 3.73% rise and well below the central bank’s forecast.

Inflation came in at 47.3% in April, down from March’s 55.9%. April's result represented the weakest inflation rate since April 2021. The moderation was driven by slower growth across a host of subsectors. Since peaking at close to 300% in early 2024, inflation has since tumbled thanks to a softer rate of currency depreciation, tight fiscal policy and market liberalization measures. In addition, the trend pointed down, with annual average inflation coming in at 128.9% in April (March: 149.8%). Finally, consumer prices increased 2.78% over the previous month in April, a smaller increase than March's 3.73% rise and well below the central bank’s forecast.

Panelist insight:

Panelist insight: On the outlook, Itaú Unibanco analysts said: “We expect the disinflation process to continue in the coming months with headline inflation falling to 30.0% by year-end due to a lower-than-expected pass-through following the lifting of capital controls in April.” BBVA analysts said: “According to the high-frequency data available, in May inflation is estimated to be around 2.5% month-on-month in the first weeks of the month, and we have more positive signs going forward: gasoline prices dropped by 4%, and the government reduced tariffs on cell phones and other technology products. Therefore, inflation is expected to continue slowing down in the coming months. For this reason, we assign a downward bias to our annual inflation projection of 35% for 2025.”

On the outlook, Itaú Unibanco analysts said: “We expect the disinflation process to continue in the coming months with headline inflation falling to 30.0% by year-end due to a lower-than-expected pass-through following the lifting of capital controls in April.” BBVA analysts said: “According to the high-frequency data available, in May inflation is estimated to be around 2.5% month-on-month in the first weeks of the month, and we have more positive signs going forward: gasoline prices dropped by 4%, and the government reduced tariffs on cell phones and other technology products. Therefore, inflation is expected to continue slowing down in the coming months. For this reason, we assign a downward bias to our annual inflation projection of 35% for 2025.”

Consensus Forecasts and Projections for the next ten years

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