Private consultancies estimate a inflation around the 11% for Augustas a result of the impact of the devaluation on prices and the political uncertainty after the STEP. The acceleration of the CPI, which occurred mainly in the second half of the month, left a high floor for September. Thus, analysts already anticipate that this month, as a result of the “drag effect”, inflation could return to around double digits. And, although the measures adopted by the Government could contain part of the increasesIn the future, they warn of other factors that will add pressure to prices.
For example, as summarized by the C&T consultancy, “prices had already been showing an acceleration since the second half of July, but there was an additional change in the dynamics after the jump in all exchange rates on August 14.” “This meant that, comparing the last week of the month against the same week in July, a rise of 14.7% is verified, much higher than the average data for the month, and which leaves a drag of 5% for September”, they explained from the firm.
“For September we expect a second month with double-digit monthly inflation”, they summarized for their part from Ecolatina, and detailed: “The drag of the second fortnight resulting from the shock that meant the surprising result of the STEP, together with a high pass through The recent discreet jump in the official exchange rate and the sharpening of the uncertainty that this change of scenario brought with it will imply that the dynamics of price increases will remain high and unstable”.
In this sense, the consultant pointed out that “upside risks are manytaking into account an inertia that is consolidated at higher floors, the instability generated by the absence of anchors, the scarcity of foreign currency, the absence of a comprehensive plan to lower inflation, the distortion of relative prices and the lack of confidence of the Government to coordinate expectations in the midst of the uncertainty generated by the current electoral landscape”.
“For these reasons, beyond some moderation in the records of the second half of September, we estimate for 2023 an inflation floor of 160%, subject to the evolution of political and economic events in the coming weeks”, highlighted from Ecolatina.
For his part, Eugenio Marí, chief economist of the Libertad y Progreso Foundation, stated: “For September, our projections are that the CPI will be in the range of 8.5% to 10.0%, marking the second consecutive month in which the index will be hovering around double digits in monthly terms”.
“The increase registered in the CPI during August generates a drag effect of more than 4 points for the September index. Assuming that there are no other shocks like in August, core inflation dynamics are already close to double digits. Although the price freezes ordered by the Government, which include fuel and transport, among others, will help temporarily moderate the index. But at the expense of continuing to accumulate repressed inflation”, Mari stressed.
Inflation and mass consumption
The effect of the devaluation of the official dollar was especially felt in many mass consumption products, which have a direct impact on the basic basket. In this regard, Damián Di Pace, director of the consulting firm Focus Market, pointed out that “The acceleration in the price variation led to increases of up to 20% in various categories of mass consumption in August.”
“The impact was immediate in the last 15 days in the pockets of Argentineswith a drop in sales in nearby mouths of up to 500 m2 of 18%with a greater impact on food, personal care, and cleaning”, highlighted the analyst.
When projecting how inflation could evolve in the coming months, Di Pace analyzed: “The Government raised the only two anchors it had to slow down inflation in the coming months, which were wages and credit. This monetary expansion plan via an attempt to improve the income of retirees, pensioners, social plans with expansion of credit, will lead to an increase in the fiscal deficit and the quasi-fiscal deficit that currently remunerates $1.8 trillion per month. That is to say, that the temporary relief will be very short-lived in order to have a greater increase in the price variation in the months of October, November and December”.
Source: Ambito
