Although still at very high levels, the inflation slowed down in May and was below market projections. The data for last month (7.8%), was largely the product of a marked moderation in the rise of the item food. And the trendaccording to the first private polls, it seems to have remained in the first half of June.
This was highlighted, for example, by the CPI GBA measured by the consultancy ecolatinin which he pointed out that during the first half of the month “it sustained the deceleration verified in the second half of May”. “The index registered a growth of 7.4% compared to the first half of May. The moderation responds mainly to a lower dynamic of Food and Regulated”they explained from the firm.
And they detailed: “Food and beverages grew 6.9%, marking a slowdown of 1.2 pp compared to the same period of the previous month. The lower increase in the chapter responds to a lower evolution of Massive Consumption products, which grew 6.9% after the high record of the first half of May (+8.4%), together with a moderation in the growth of Fruits (+2.8%) and Meats (+1.6%). On the other hand, the Regulated ones climbed 7.7%, showing a deceleration with respect to the first fortnight of May (+12.7%)”.
Meanwhile, from the firm they highlighted that the chapters that grew the most were “Housing and basic services” (+11.8%), driven by increases in electricity (+29.7%) and rents (+10.5%) ; “Education” (+9%), driven by increases in schools (both in PBA and in CABA) and in bookstore items and books; and in “Equipment and home maintenance and Health”, both items with growth of 8.1%.
In this scenario, for the rest of June from the consultant they foresee a behavior similar to that seen in the first fortnight, “with a month that would close just above 7%”. “Beyond the moderation with respect to the high records of April (8.4%) and May (7.8%), we do not expect this trend to continue for the rest of the year: the current inflationary regime is not only consolidated at higher floors, but it is unstable and lacks anchors, for which reason fluctuations are part of the nature of the process”, they explained.
For its part, the survey carried out by the consultant GCL also evidence a slowdown in the Food and beverages category compared to previous months. For example, from the firm they pointed out that in the second week of June a weekly variation of 0.7% was registered, accelerating 0.2 pp compared to the previous week. However, it was a smaller increase than that registered, for example, in the second week of May: it had climbed 3.6% weekly.
“Average monthly inflation also slowed down, standing at 6.5%, 0.8 pp less than the previous week (end to end the rise is 5.2% per month)”, they explained from LCG, and remarked: “This week the percentage of products was 20% and adds the third week in a row at a level significantly below the average of beginning of the year”.
Surveys
Along the same lines, according to the survey carried out by the consultant Freedom and Progress, the CPI accumulated a rise of 5% in the first two weeks of June. “With this rise, the price dynamics shows a slowdown compared to the reading for the first two weeks of May (7.5%), and is at the levels registered in the first half of April”, they detailed.
“According to our projections for the coming weeks, June inflation 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.
Among the factors that affect the moderation of inflation for this month, 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 lesser impact of regulated (remember that in May there were updates in rates that are not repeated with the same intensity in June)”.
There was also a moderation compared to May in the price survey carried out by C&T for GBA in the first fortnight, “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 concluded.
Source: Ambito
