Week Ahead: May Inflation Prints May Show A Deceleration Of Price Pressures

• Fitch will be closely monitoring the upcoming May inflation prints from Brazil, Chile, Colombia and Mexico. Notably, commodity prices are expected to remain elevated throughout 2022, as the Russia-Ukraine conflict and the subsequent economic sanctions on Russia continue to disrupt the global supply of fuel and food in particular—the two countries provided 27% of global wheat exports and 14% of global corn exports in 2019. 
• In addition, persistent supply chain issues, exacerbated by COVID-19 lockdowns in China that shutdown ports and stranded freight ships will also contribute to price pressures. That said, the Agency’s global team forecasts that headline inflation growth will peak by end-Q2 2022. 
• Of note Peru’s May inflation print last week showed inflation reached 8.1% YoY, up only modestly from 8.0% YoY in April, possibly signaling that the peak of price growth is approaching. 
• Higher government spending on gasoline subsidies across several markets (including Chile, Colombia and Mexico) will reduce fuel costs for households.

(Source: Fitch Solutions)