LatAm Ex-Brazil Inflation: Goods Have Normalized; Services Still Carry the Last Mile

Research evidence excerpt

LatAm Ex-Brazil Inflation: Goods Have Normalized; Services Still Carry the Last Mile

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July 31, 2026 07:00 AM GMT

Morgan Stanley & Co. LLCMWeek Ahead in Latin America | North America Nicolas Eterovic

Economist

LatAm Ex-Brazil Inflation: Goods Nicolas.Eterovic@morganstanley.comMorgan Stanley C.T.V.M. S.A. +1 212 761-1245

Fernando D Sedano

Chief LatAm Ex-Brazil EconomistHave Normalized; Services Still Fernando.Sedano@morganstanley.com +55 11 3048-6605

Julia Lobato Barbosa

EconomistCarry the Last Mile

Julia.Lobato.Barbosa@morganstanley.com +55 11 3048-6016

Ana Madeira

This week we examine structural trends in goods and services Economist

Ana.Madeira@morganstanley.com +55 11 3048-9582

across LatAm Ex-Brazil. Next week we focus on policy meeting Thiago A. Machado, CFA

for Brazil and Mexico; monetary policy minutes for Chile; Economist

Thiago.Machado@morganstanley.com +55 11 3048-6249

Colombia monetary policy report and minutes; and CPI for

Mexico, Chile and Peru.

This week we investigate the relation Exhibit 1: Goods/Services Relative

between services and goods inflation in Prices (base March 2020 = 100)

LatAm ex-Brazil. We find evidence of

advanced relative-price reversal, but

underlying services inflation remains

elevated… The post-pandemic inflation

adjustment across Chile, Colombia,

Mexico, and Peru has moved through two

Source: INE, DANE, INEGI and INEI. Morgan Stanley LatAm

distinct phases. The initial phase was Economics

dominated by a large but ultimately

temporary goods-price shock. The second—and current—phase is characterized by

substantially more persistent services inflation.

The implication is that the last mile of regional disinflation will depend less on

further normalization in global goods prices and more on domestic services inflation