This context, then, puts a slightly higher floor to the CPI of the last month of the year. Although it is still too early to venture a number, according to the latest Survey of Market Expectations (REM) of the BCRA, an inflation of 6.4%. This would mean an acceleration with respect to the number expected for November.
It is something that, analysts say, usually happens in December. “Except in the years in which there was a previous devaluation during the year, Inflation always accelerates in December due to the context of the holidays”, he explained to Ambit Marín Kalos, director of EPyCA Consultores, who added: “This year, inflation has been around 6% in previous months. It is an unknown dynamic for Argentina. There is a much higher inertia and we are in an inflationary regime with a much higher floor, around 6%., which is obviously not a rigid floor and hopefully it can be drilled. But we are in a year that on average is high”.
“In December there is seasonal demand for the Holidays, which is added to the movements that usually exists around the prices of the Dollars, which configures very marked seasonal offers and demands. So, it is likely that this anxiety, plus the seasonality of prices for the Holidays, and a year-end that is shaping up to be very stagnant in terms of economic activity, effectively make December a month where inflation can overheat a bitKalos added.
For his part, Eugenio Marí, Chief Economist at Libertad y Progreso, confirmed that in November there was a deceleration in the index of inflationpartly due to a lower rise in the price of food. “Looking ahead to December, another factor that may help moderate the rise in the CPI is the Fair Price Program, which, although it is not an effective tool to combat inflation, may have a transitory impact on the measurement of the Price Index. This is because it mainly includes products from the Food and Beverage category, which is the one with the highest weighting in the index with 23% for the GBA region. Nevertheless, Given the current inflation levels, in principle we estimate that its effect will not be enough to break through the 6% monthly floor”, pointed out the economist.
It is that, as he explained, “the outlook ahead is challenging”. “Only between December and March 2023, the Treasury faces a debt maturity of almost $4 trillion, while the BCRA is already close to accumulating $10 trillion in remunerated debt. If financing in the domestic market begins to get complicated, as indicated by the latest tenders, this will leave the Government more dependent on the monetary issue, which would accelerate inflation,” Marí remarked.
December, month with increases
The program Fair Prices in mass consumption products can help contain the rise in foods. Although, as detailed from Eco Go, “In the best of scenarios, it can lower the index by 0.3 percentage points.”
However, this trend may not continue in the last month of the year. “In December there are many product categories, especially those linked to the Holidays, which are going to accelerate. Without a doubt. In some points of sale, which are the large commercial areas that are within the price agreements, there you will be able to find cheaper prices. But in the rest of the businesses, prices will accelerate,” said Damián Di Pace, director of the Focus Market consultancy.
In addition, there are other items that are expected to increase next month. Among them, the quotas of prepaid medicine, with a rise of 6%; installments in private schools that have a state contribution, up to 14.5% in the City of Buenos Aires and 10% in the Province.
In December, the removal of subsidies will once again impact the ballots of the public servicessuch as gas, electricity and water. An increase of 4% will be added to the fuelsafter the Government agreed with the oil companies a scheme of monthly increases until March.
Meanwhile, the tenants who must carry out their update in the rental contracts will suffer an increase of 77%, according to the index that contemplates the variation of inflation and wages.
Source: Ambito
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