Therefore, in the short term, inflationary pressures persist in some segments of the economy. At the same time, the continued weak revision of prices for services (and basic items in general) in September is undoubtedly cause for some optimism. While there are significant upside risks, particularly on fuel, we do not see a threat that could jeopardize continued disinflation in the near term. Year-on-year inflation figures for December and January will be greatly helped by the base effect, but thereafter, given the recent revision of monthly headline prices and risks, it will be quite difficult to reduce inflation from 7% to 3%. So from a monetary policy perspective, the hard part is just about to begin, as the central bank’s task is to achieve the 3% inflation target, not just single-digit inflation.
Regarding the average inflation rate in 2023, we continue to expect an annual rate close to 18%. However, next year we expect average inflation to be slightly above 5%, with upside risks. Fuel price increases could continue, and the second-round effects of tax changes already enacted and yet to come, as well as expected dynamic growth in real wages, pose inflationary risks. Furthermore, the Palestinian-Israeli war carries the risk of increased risk aversion, which will affect not only energy prices but also the guilder, thus adding more pro-inflationary risks. Another factor that suggests we cannot relax is that retail price expectations have been somewhat stronger recently, a warning sign of a possible reacceleration in core inflation.