The division with the highest increase in the month was “Housing, water, electricity and other fuels” (11.9%), as a result of the increase in rates for electricity and natural gas services through the network. It was followed by “Restaurants and hotels” (9.3%) and “Health” (9.0%), the latter due to increases in medicines and in the fees of prepaid medicine companies.
On the contrary, the two divisions that registered the smallest variations in May were “Food and non-alcoholic beverages” (5.8%) and “Education” (4.9%). The slowdown in the food item (which had risen 10.1% in April) partly explains the lower monthly rise registered by the CPI.
All in all, the data for May was considerably lower than that projected by various private consultancies: for example, analysts participating in the BCRA Survey of Market Expectations (REM) had estimated inflation of 9%. Regarding what may happen in Juneaccording to the first polls, different firms also estimate that a new “moderation” may be observed in the rise in retail prices.
Inflation: what can be expected for June
In this scenario, as reported by the consultant C&T“the data from the first half of June from the GBA price survey suggest that there was a moderation compared to May, both because there was no increase in gas and because food is growing at a slower rate due to decreases in vegetables.” “With this evolution, inflation for the month could be reduced to around 7%,” they said.
Meanwhile, from the Freedom and Progress Foundation analyzed: “In the first two weeks of June, the IPC Libertad y Progreso accumulated a rise of 5.0%. With this increase, the price dynamics shows a slowdown compared to the reading for the first two weeks of May (7.5%), and is located at the levels registered in the first half of April”.
“According to our projections for the coming weeks, inflation for June would be around 7.3%, which would be the lowest monthly level since February of this year. Although we must not forget that seasonally the price rise in June is less than in previous months. All this assuming that there will be no disruptive events such as the run against the peso in the last week of April”, they remarked from the firm.
“Among the factors that help the moderation is that the drag effect left by the last week of April is eroding, the slowdown in the rise in the official exchange rate, which contributes to the slowdown in the prices of food and beverages (which in the second week of June had rises similar to those at the beginning of the year) and the lower impact of regulated (Let’s remember that in May there were updates to the rates that are not repeated with the same intensity in June),” they concluded.
“If this scenario continues and food prices maintain the relative deceleration registered up to now, the sixth month of the year can present a more ‘relaxed’ dynamic than the last few months”, they remarked for their part from the consultant mcaalthough they added: “For this month we expect an important explanatory factor from the regulated prices, given that the increases in transportation (for the AMBA), private school fees, private medicine, fuel, among others, the evolution of the other factors will be crucial to determine the final price dynamics of the next month”.
“If these variables remain relatively constant, we could expect a slowdown in prices in June, or at least, close to the data for May. In the same way, this should not be taken as a positive sign, since it would not imply a change in trend in the short term, since we maintain a possible annual inflation floor of 130%”, they stressed from ACM.
Along the same lines, from LCG they pointed out that, although a slowdown in the price of food was observed in the first days of June, “inflation expectations continue to hold very high inflation records.”
“Inflation seems to be consolidating in records that do not move significantly from double digits per month. Beyond the specific data for a particular month, we do not believe that you will see a change in trend this year. We project inflation of around 135% per year through December, consistent with an average rise of 118% throughout the year,” they concluded.
Source: Ambito
