Next Thursday the 12th, the INDEC will release the inflation data for December, with which it will finally be known how 2022 closed. The Government estimates that in the last month of the year the Consumer Price Index (CPI) had a variation similar to that of November (4.9%) or slightly higher. Meanwhile, different private consultants projected that it exceeded 5%. And that trend, they say, would continue during January.
Although the month is just beginning, analysts consulted explained that the expected increases in different regulated prices (such as public service rates, among others), will add pressure to inflation, and they stressed that it will probably be above 5% again.
“I see the inflation floor for January as closer to 6% than 5%,” Camilo Tiscornia, director of C&T, told Ámbito, who added: “Inflation for December gave us 6.2%, although for other colleagues was below 6%. But surely it was more than 4.9% in November.”
“January is generally higher than December. With which, if December gives above 5%, it is difficult for January to fall below 6%. In January, the key will be the issue of tourism. It is the most important item, which is the one that rises the most and the one that puts a lot of pressure on inflation for the month. Added to this, prepaid (which is another item with a lot of incidence), there will be increases in public services, which will have a strong impact on electricity, gas and water, “said Tiscornia.
For his part, Damián Di Pace, director of the Focus Market consultancy, said: “Despite the Government’s efforts to try to generate price stability in inputs, raw materials, transportation and food, the effect of price corrections The regulated entities of the economy are going to have an important interference in the month of January”.
“On the other hand, it is important to see that the correction of the official wholesale exchange rate is also accelerating and we are beginning to see external restrictions for the importation of inputs and raw materials for production,” said Di Pace, who concluded: “At which, all these factors combined, would mean that inflation in January could surely be on the rise”.
Meanwhile, the Libertad y Progreso Foundation projected that the CPI would again show monthly growth between 5.5% and 6% in the first quarter of the year. In this regard, Aldo Abram, director of the entity, analyzed: “The improvement in expectations for the inauguration of Minister Sergio Massa, plus some measures taken, brought a moderation of the decline in the hoarding of pesos and, therefore, of his power purchasing power, which we have seen up to now reflected in the drop in inflation”.
“The problem is that, beyond the temporary impact of price controls, confidence in the current economic management has been fading since November; since there were no substantive changes. This has caused a new growing decline in demand for currency and its purchasing power, which was observed in the rise in parallel dollars and which was accelerated by the President’s absurd decision to attack the Supreme Court. If this attitude, which generates expectations of an institutional crisis, is sustained, we Argentines will pay for it with a greater increase in inflation in the coming months”.
Planned increases for January
In addition to some items that may impact the price index due to seasonal issues, during the first month of the year increases in various regulated services will take place (or, in some cases, have already taken place).
For example, on Tuesday Enacom approved the application of increases of 4% in January and another 4% in February in communications services (telephony, cable TV and internet). This is in addition to the increases of up to 40% that already apply to public transport in the metropolitan region, both for buses and trains.
In the case of prepaid medicine, as of January the second part of the 13.8% increase that the Government had authorized for December came into effect, but which it decided to split into two tranches. Thus, prepaid health services will have an increase of 6.9% in January.
In the case of public services, energy rates will continue with the increases established in the segmentation scheme postulated by the Government during the past year. In this case, the sectors with the highest income will have a cut in the subsidy that will impact the price of the ticket.
Meanwhile, gasoline and diesel will rise 4%. It is the amount that the oil companies agreed with the Government, but this month it will be applied from the second fortnight.
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