The recent data suggests that accelerating meat inflation continued to spur inflation, pushing it to 7.5% YoY as of 19 May. In particular, combined price gains across meat categories (to a large extent pork and chicken) explained nearly half of the weekly inflation. Meanwhile, the contribution from potatoes, cabbage, onions and carrots was around 0.11pp, which was offset by deflation in cucumbers and tomatoes (-0.13pp). Gasoline prices ticked up somewhat last week, but we do not see this as the beginning of a sustained upward movement.
Extrapolating recent weekly CPI prints, the full-month increase in consumer prices might come at 0.8-0.9%, which would translate into 7.5-7.6% in YoY terms (vs. 7.3% YoY as of the end of April).
Looking beyond May, we think the headline CPI will start to moderate in July, although we note that the shock on the pork market has proved to be sharper and more persistent than we initially anticipated. Pork (and related) prices have been on a strong upturn since March and are already up more than 10% YTD, contributing around 0.5pp to the acceleration in headline CPI since the start of the year. Another 10% price increase from the current levels might push the headline CPI all the way to a peak of almost 8.0% YoY in June which, assuming the same magnitude of disinflation in 2H14 as we initially expected, would imply year-end headline CPI at around 5.8% (rather than the 5.3% YoY in our baseline).