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Sunday, August 14, 2022

what will happen to the dollar and inflation

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Forecasts for the dollar

According to the previous REM published by the BCRA, the private sector expected the dollar to end 2022 at $159.59.

This is an increase of 56.6% for all of 2022, some 20 percentage points less than the estimated inflation for the same period, which stood at 76.9%.

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While the projected price increase rose from the previous REM, the projected rate of devaluation increased slightly.

In this way, the market continues to warn that the BCRA will accelerate, as it has been doing, the rate of devaluation, but that the adjustment will run far behind inflation. It is worth noting that when the dollar jumps, it usually impacts prices at the local level, which implies a risk in the face of the current inflationary dynamics in the country, and in the world.

Inflation projection

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On the other hand, amid a turbulent foreign exchange market, analysts again worsened the projections of the Consumer Price Index, when calculating it at 76% for all of 2022, that is, 3.4 percentage points higher than the forecast of the previous survey.

Now, those who best forecast inflation for the short term (TOP-10) On average, they expect inflation of 79.2% yoy (4.1 pp higher than the May survey).

In addition, the REM participants reviewed the inflation forecasts for 2023 placing it at 64.6% yoy (4.6 pp more than the REM for May) and for 2024 at 50.2% yoy (4.1 pp higher than the previous survey).

Regarding core inflation, those who participated in the REM forecast that it would reach 76.9% yoy at the end of 2022 (4.0 pp higher than the last survey).

For May 2022, the median of the estimates of those who participated in the previous REM survey suggested an inflation of 5.2% per month, while the data observed in that month turned out to be 5.1%.

For June 2022, the median of the estimates of the current survey was 5.2% per month, while the average of the TOP-10 of the best forecasters estimates it at 5.4%.

Source: Ambito

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