In fact, the first surveys carried out by private consultancies already predicted a jump in the CPI for this month, product of a higher rise in food due to the price of meat. That is why, according to some estimates, inflation in August could even reach double digits.
“The Government seems to seek to carry out a damage containment policy, but that does not imply that the fragility of the exchange rate and electoral expectations do not have a cost on inflation. The jump in the devaluation rate will have an impact on prices and the August rate will hardly exceed double digits. The question is whether with these measures, added to those at the end of July, the exchange market will achieve some stability until October,” Claudio Caprarulo, director of the Analytica consultancy, analyzed before Ámbito.
Meanwhile, as explained by Lautaro Moschet, an economist at the Fundación Libertad y Progreso, “the devaluation of the Central Bank was a possibility that had been considered for a few weeks when the guidelines of the agreement with the IMF were announced.” “This rumor caused greater pressure on free dollars and explains a good part of the increase in recent weeks.”, he detailed.
“Now, what is sought with the increase in the exchange rate is to discourage the demand for dollars so that the Central Bank loses the least amount of reserves possible. Let’s remember that today it is around US$10,000 million. This will have a direct effect on prices and will drive inflation.. Therefore, the rise in the interest rate will seek to contain the demand for pesos, in such a way that the rise in prices does not spiral”, remarked Moschet.
After the rise of the official dollar, added to the impact of the surprise in the primary elections, the alternative dollars also shot up this Monday and that, analysts say, can also be transferred to prices. “It’s not just the official one that matters, the blue one too”, recognized the economist Camilo Tiscornia, who added: “It must be taken into account that this jump occurs in the middle of the month, with which the impact will be distributed between August and September. On the other hand, it is necessary to see if the exchange rate remains here or continues to rise. You can’t know. It is still difficult to think of a number, but it is already a reality that last week there was a very strong jump in food.”
July inflation
In this context, the INDEC will announce inflation for July on Tuesday. A fact that, as the analysts remarkedwill partly reflect the jump in alternative exchange rates. That is why, after the 6% in June, the consultants predict that the CPI presented a rise of around 7% in the seventh month of the year.
For example, from LCG they pointed out that their survey of food prices “marked a slowdown in July, hovering around increases of around 5% per month, which would contribute 1.4 pp of inflation to the CPI”. “On the other hand, increases in regulated prices such as transport, fuel, communications and schools would contribute almost 1.6 pp to the CPI. Lastly, the rise in the parallel dollar towards the end of the month could partially affect the figures for July. Therefore, we expect the inflation data for July to accelerate compared to the previous month, reaching around 6.7%-7% per month.”, they pointed out from the firm.
Along the same lines, the CPI (GBA) Orlando Ferreres for July registered a monthly increase of 6.6% (In June, the consultant had estimated a rise of 7.2%). “Regarding the main items, Recreation and Health led the increases for the month, registering monthly increases of 9.1% and 8.8% respectively, followed by Miscellaneous Goods, which presented a variation of 8.3%,” they analyzed.
The truth is that, although it would present an acceleration with respect to June, the data for July could be a new floor with respect to what the market expects for August and September.
Source: Ambito
