This Thursday the INDEC will announce the inflation December and the Government anticipated that the data will be around 30%, although some consulting firms even estimate that it could around 25%. Although it is expected certain moderation for Januarysome factors can add greater pressure on prices.
One of them was the increase in fuels, which on January 3 rose on average by 27%. Another aspect that can have an impact on inflation in the short term is the jump in the exchange gap. Although different analysts estimated that the transfer can be “partial” and that a lower demand would not validate a sharp jump in some pricesthe truth is that it can be an extra boost for the inertia that has been observed.
After the devaluation announced by the Minister of Economy, Luis Caputo, The gap between the official dollar and the financial ones averaged 20% in December. But in January the alternative exchange rates “they woke up” and the spread increased to 40%.
As explained to Ámbito Rocio Bisanganalyst at the consulting firm EcoGo, this scenario “It can certainly add pressure to inflation.”both because of the products that are imported with our own dollars and because of the expectation of future devaluation that generates a jump in the gap.”
Sergio Chouzadirector of the consulting firm Sarandí, agreed that ““The jump in the gap will be partially transmitted to the formation of prices”. “Especially, in the segments of durable goods. In line with the changes in regulations for access to payment of imports, this delay of at least 30 days that the Central Bank gave with the change of Government, many companies have expectations of being able to have effective access to the Single and Free Exchange Market to be able to pay for imports. But they are not sure that they will actually be able to access it in a timely manner,” said the economist.
And, in that sense, he explained that today “The price formation they do is in many cases at a ‘celestial’ dollar, a mix dollar between the official and the Cash with Settlement”. “Because if effective access to the MULC is restrictive, some import payments can no longer kick external suppliers. So, they are going to have to do it by accessing the cable and paying the current values, above $1,100,” he summarized.
For Chouza, the jump that the CCL has exhibited since December (around 20% so far in January), “partially it will be passed on to prices”. “And then everything is interconnected: in the prices of the economy there is a lot of inertia and many propagation effects. Gradually, everything is contagious and the relative prices of a sector that is perhaps not so influenced by imports, but in order not to fall behind other tradables, ends up adjusting sooner rather than later. So the gap jump is definitely going to hit”, he concluded.
Gap: lower margin for transfer to inflation
The inflationary acceleration had a full impact on the purchasing power of income. For example, as Santiago Manoukian pointed out, Ecolatina plans for December “a drop in real wages close to 10%, which will probably be the highest since April 2022”. “This is clearly going to affect the consumption “, summarized.
This lower demand will, in some way, put a ceiling on future increases. “I believe that the rise in parallels occurs in a context of a strong rise in regulated prices, which causes a decline in demand.”, economist Jorge Neyro analyzed Ámbito, who added: “In this context, the ability to adjust prices due to the dynamics of parallel dollars in some sectors is lower. That is to say, it may affect some sectors in particular, but the overall effect is less than in the past.”
“It is no longer so simple for demand to validate increases based on increases in financial dollars as an indicator of future inflation”, summarized the economist.
In this context of growing gap, the market does not rule out a new devaluation official in the short term. Decision that, as happened in December, would push up many prices in the economy.
In this regard, Bisang explained that “The point about whether to devalue or not has to do, among other things, with how far behind the exchange rate is with respect to inflation”. “Today the exchange rate moves at a crawling peg of 2%, which is insufficient at the rate at which prices are increasing. In that sense, we see it possible that in the coming months there will be an acceleration of the crawling peg or a new jump in the exchange rate to compensate for the delay,” the analyst concluded.
Source: Ambito
