Headline inflation is likely set to edge higher in the first half of May. We expect a print of -0.16% 2Wo2W in the first half of May, translating into a 4.58% YoY number, compared to 4.44% in H2 April and 4.41% in April. Our fresh food price trackers signal increases in both fruit and vegetable and meat and egg prices. We are expecting pressures from tomatoes, avocados and chicken prices. These pressures are likely to partially offset the seasonal decline in electricity prices (-20.0% 2Wo2W expected), the expected stability in gasoline prices (0.05% 2Wo2W) and the projected decline in LP gas prices (of -1.0% 2Wo2W).

We expect core inflation to ease. We expect core prices to post a mild increase of 0.03% 2Wo2W, consistent with 3.70% in annual terms, compared to 3.87% in H2 April and 3.87% in April. If accurate, core inflation would fall back the narrow 3.6-3.7% in which it had fluctuated for twelve months before edging higher in April.

Looking ahead, headline inflation will not fall below 4.0% until August while core prices will hover around 3.6-3.7% the rest of 2Q and in 3Q.

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This document was prepared by Banco Bilbao Vizcaya Argentaria’s (BBVA) Research Department on behalf of itself and its affiliated companies (each a BBVA Group Company) for distribution in the United States and the rest of the world and is provided for information purposes only. The information, opinions, estimates and forecasts contained herein refer to that specific date and are subject to changes without notice due to market fluctuations. The information, opinions, estimates and forecasts contained in this document have been gathered or obtained from public sources believed to be correct by the Company concerning their accuracy, completeness, and/or correctness. This document is not an offer to sell or a solicitation to acquire or dispose of an interest in securities.

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