The February inflation will be around 15%indicate the first private estimates that are known, a fact that, in the opinion of the president Javier Milei, would be a “number” depending on the economic context that Argentina is experiencing. Let us remember that the CPI marked a 25.5% in December and 20.6% in January.
In both first weeks of the month which is about to conclude, prices had a very important decelerationand then remain more or less stable in the third. The end of the month, meanwhile, always brings some more adjustments.
But as private analysts already warn, the long-awaited goal of dropping to single digits seems to have to wait a few months because the recomposition of relative prices is just beginning.
Furthermore, some assume that March inflation will be closer to 15% than 10%, as a result of all the increases in regulated prices and seasonal issues. that affect that particular period of the year. It’s going to be a couple of months more similar to February.
Fausto Sportorno, the chief economist of the Center for Economic Studies, Orlando Ferreres anticipated the result of the estimates that that consulting firm prepares every month. “It will be around 15% in February and March will be similar due to seasonal issues.”. It will be similar for a month or two and then it should give way,” she said in an interview.
As he pointed out Ambit days ago, Single-digit inflation is going to take a little longer to arrive. And all this occurs within the framework of an unusual equation in the face of a exchange rate delay.
If we continue at the current pace, in a couple of weeks the Multilateral Real Exchange Rate (TCRM) will have lost the competitiveness it obtained due to the devaluation of December 13. The TCRM is going to start to be delayedbut that indicator that shows the relationship of prices of local products with those of their commercial partners, It does not have a counterpart in dollars. There are few. Logic would indicate that a delay must have a greater amount of foreign currency as its counterpart.
“There is no structural reason for one of the two to be delayed, either devalued or inflation lowered,” says Spotorno.. Since the government’s intention is not to devalue again, everything would indicate that prices should begin to decline. And free prices are showing that effect, although the problem is that the update of rates and salaries, which will drive values up.
Inflation: free prices slow down
As indicated by the Focus Market consultancythe free prices agreed upon in retail channels are slowing down sharply. In February they rose 9.8%, says the consulting firm in its latest report. That is, it would enter the dynamics of one digit.
“Inflation in mass consumption decelerates in the month of February 2024 almost 16 points compared to January 2024 which was at 26.2%,” he maintains. Damián Di Pace, the director of Focus Market. But as is almost obvious, the lower inflation rate comes hand in hand with a very strong drop in consumption.
The report clarifies that “The drop in mass consumption this month was almost 23%.” Unregulated prices in the economy are collapsing because companies They can’t sell.
“After the strong increases accumulated between December 2023 and January 2024 “The price lists for the retail channel came with new discounts to convert stock and surplus into a better sales flow.”explains the consultant.
Focus Market proposes, in this sense, that “The loss of purchasing power of our currency and income of Argentines is well below the variation in prices of basic products in the economy.”
Rates inflation rises
A report carried out by the Argentine Institute of Fiscal Analysis (IARAF) warns about the problem of price acceleration that has been recorded since the last quarter of last year, which has not been accompanied by public service rates.
The gap between the core inflation of that period and the regulated inflation went from a range of 20 points to 60 in favor of the CPI. In order to lower inflation and obtain a fiscal surplus at the end of the year, regulated prices have to rise more than the rest.
Inflation: why rice soared 951% in one year
“Rice is the mass consumption product with the highest year-on-year increase of 951%. Rice production in Argentina in the 2022/23 campaign was the lowest in the last 13 years marked by climatic adversity,” highlights Di Pace.
The report warns that ““production fell almost 25%” and details that “for 3 consecutive years the rice fields suffered from drought that affected irrigation work and a loss of the planted area of 10%.”
In the top 10 of the products that increased the most in February are: Laundry detergent 46.6%, Rice 46.4%, Disinfectants 40.4%, Razors 39.1%Toothpastes 34.4%, Broths 31.7%, Diapers 29.5%, Pre Mixes 25.4%, Toilet Soap 24.5%, and Snacks, 18.1%.
Source: Ambito
