Macroeconomic Forecast Puerto Rico

BMI View: Puerto Rican consumer price inflation came in at 4.1% y-o-y in September, which confirms the acceleration of inflationary pressures in the island since December 2010. This is in line with our view that inflation was going to rise as a result of elevated global commodity prices but could nevertheless raise some upside risks to our 2011 year-end forecast of 3.5%. However, since this increase has been driven largely by transportation prices, which have risen twice as fast as the headline inflation rate, it supports our view that a moderation of energy prices in 2012 will see inflation average just 3.3% in 2012.

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