June CPI: Food Payback and Weaker Cyber Sales

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June CPI: Food Payback and Weaker Cyber Sales

UpdateManticipated. Importantly, the energy component was not the source of the upside

surprise: volatile energy was broadly in line with our forecast, with gasoline actually

slightly below our assumption and gas accounting for most of the small residual

upside.

Food dynamics within volatiles remained well behaved. Volatile food excluding

fruits and vegetables rose modestly, while fruits and vegetables declined. Taken

together with the increase in core food, the food signal is less benign than in May,

but it still does not look like broad fuel pass-through. The upside was concentrated

in non-volatile food categories rather than reflecting generalized second-round

effects across the food basket.

Overall, June was much higher than expected due to core food prices and less

aggressive Cyber-sale discounting, not because of a renewed energy impulse. The

composition remains broadly reassuring: energy is now disinflationary, volatile food

remains contained, and there is still limited evidence of second-round effects from

the earlier fuel shock. That said, the print is less clean than May because SA core

remains above target-consistent speed and services continue to show persistence.

From a policy perspective, the print does not derail our rate view. The BCCh will

likely remain cautious given the upside surprise, and the need to monitor whether

food pressures persist. However, the broader inflation narrative remains one of an

energy shock that is unwinding without materially contaminating the rest of the

basket. We continue to expect the BCCh to deliver a 25 bp cut at the September

meeting.

Exhibit 1: Chile: Summary CPI Table

Source: INE, Morgan Stanley LatAm Economics.