As we move into next year it is important to identify which of the factors that kept inflation low this year will persist and which are likely to have been short-lived. There are enough signals to think inflation will snap back next year. Early in 2016, last January's one-off fall in telecom tariffs will drop out of the yearly rate, resulting in a significant adverse base effect for inflation. 
If we factor in the likely unwinding of discounts in mobile phone tariffs early in the year, inflation could shift up as much as 50bp in the first month of next year. At the same time, growth is expected to average 3.2%, saar in the latter three quarters of next year, somewhat above the estimate of potential GDP growth, currently at 2.8%. This should contribute to a reduction of slack in the economy and the potential emergence of mild demand-side inflation pressures. 

Private consumption has driven the ongoing recovery in activity, which is expected to pick up pace next year. Besides the potential for the recovery to generate demand-side inflation pressures, it could also unleash what is seen as pent-up passthrough pressures. A 1%-pt depreciation of the peso is estimated roughly translates into a 3bp-5bp increase in headline inflation over a 12-month span. 

The currency has sold off about 16% over the past year, yet passthrough has been fairly low. Nonfood goods inflation, considered to be the best indicator of passthrough pressures, has indeed firmed, but the increase has been moderate and well contained. With domestic demand strengthening, the increased scope for firms to transfer increased costs to consumers could unclog passthrough effects. These could be bolstered by a drawdown in inventories as well as the expiration of FX hedges that helped to contain currency-driven cost increases. Last, having benefited this year from a benign base effect and fading supply shocks, unprocessed food price inflation is expected to normalize, reaching mid-to-high single-digit levels next year, contributing to a rise in non-core inflation.