Again, the rise in Food and non-alcoholic beverages (4.4%), it was the one that had the highest incidence in the general index in all the regions. In any case, it was the smallest variation for this item so far this year, after the strong rises registered as a result of both the war in Ukraine and the drought that impacted regional prices during the summer.
Within the Food category, the rises in Meat and derivatives (6.5% in the GBA); milk products dairy and eggs (4.3%); and Bread and cereals (4.2%). In turn, Oils, fats and lard (7.7%); Sugar, sweets, chocolate, treats, etc. (6%); Coffee, tea, yerba mate and cocoa (6.8%) were the ones with the highest increase; while Vegetables, tubers and legumes recorded declines in most regions (-2.8% in the GBA).
Meanwhile, when analyzing by category, Regulated Products (5.7%) had the greatest variation in the month due to the increase in prepaid and fuel, added to the rise in cigarettes and electricity and water services in some regions of the country. Meanwhile he Core CPI grew 5.2% and Seasonals, 3.4%, rising below the average as a result of the drop in Vegetables, tubers and legumes.
As explained by Martín Calveira, a researcher at the IAE Business School, after “the maintenance of inflation above 5% per month in three consecutive months, the largest increase is recorded for the first five months of the year since 1991”.
“The increase in the basket that makes up the IPC comes affecting with greater relative intensity the middle and low income sectors, even more so to those who are in informal work regimes, who show greater deterioration in the purchasing power of their salaries. This is exposed when observing the disaggregation of the CPI, the monthly rise of Food and non-alcoholic beverages (4.4%), which accumulates almost 34% in the year, was the one that had the highest incidence in the entire country”, Calveira added. .
What to expect in June
The first projections show that inflation will not pierce 5% in June. There are different arguments that support these forecasts: in the first days of the month, according to private surveys, food prices recorded strong increases again. In addition, different magnifications were already preset, such as utility and prepaid rates. To this can be added a greater pressure by the jump of the financial dollars which was recorded in the last few days.
“To the extent that the dollar reflects a loss in the purchasing power of the peso, with the rise in parallel exchange ratesthat is anticipating that in the future all goods and services will reflect this loss of value of our currency in their price: it is being anticipated that in the future there will be more inflation”, analyzed Ámbito Aldo Abram, director of the Fundación Libertad y Progreso.
For their part, from the LCG consultancy they highlighted that in the first week of June, their survey of Food prices showed an increase of 2.8% weekly. “Thus, food marked a rise of 5.5% point to point in the last four weeks: if this level is maintained in the remainder of June, they would contribute 1.4 points to the general CPI,” they pointed out from the firm.
“Food, from what we see, increases around 5% per month. We are going to see if the uncertainty in the financial plane affects, but I do not believe that it influences too much. The foods point to continue with the rhythm that they have been showing. Some even moderated, but I think they will continue at this level”, said Camilo Tiscornia, director of C&T Economic Advisors.
But, beyond food, other increases are expected that will also add pressure to the CPI. “During the month of June, increases of 17% are expected in Electricity, 20% in Gas, 17% in Urban Buses, 10% in Prepaid and part of the effect of the increase in Fuels which occurred in mid-May. The sum of these increases would contribute approximately 1.4 additional points to the inflation figure for June, which we project will be above 5% monthly again”, they highlighted from LCG.
This reading coincides with the first estimates made by the consulting firms Ecolatina and EcoGo, for example. It is also similar to the projection provided by the REMwhich he projected for June an inflation of 5% (had anticipated 5.2% for May).
With this scenario, the survey carried out by the BCRA projected an inflation of 72.6% for this year. However, some firms place that data a few points above. “We estimate inflation for 2022 at levels of 80% per year as of December, with a slight slowdown for the second half (average of 4.6% per month)”, pointed out from LCG and concluded: “The impacts of higher international inflation and the war in Ukraine have been felt for some months, to this is added the acceleration of the devaluation of the official exchange rate that the BCRA is carrying out, with its corresponding rise in prices of intermediate and final imported products, and finally, the increase in tariffs that will have impacts in the first and second rounds in this and subsequent months”.
Source: Ambito
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