The data recent reports on inflation surprise the market. According to private sector measurements, the weekly price dynamics I would have managed to drop below 1%thus marking the lowest record in at least six months.
This slowdown is mainly attributed to the drop in demand, together with the favorable seasonality of the month of April and Central Bank policies (BCRA), which maintains the crawling at 2% for the official exchange rate.
“The percentage of products with weekly increases continues to reflect some moderation in the average of the last 4 weeks. However, the fact that 27% of the products adjust once a week implies that the entire basket does so in less than a month,” warns the consulting firm. Labor Capital & Growth (LCG).
And he adds that, “the weekly slowdown is explained due to the strong incidence of the decrease in drinks and infusions. “Meats, baked goods and dairy products are driving the rise.”
Inflation below 1%
In particular, food inflation, which had been showing monthly increases of 11-12%, plummeted to values similar to those of June 2023, notes LCG. Furthermore, the second week of April would have seen even lower inflation, according to surveys by private consulting firms, falling below 1%.
High-frequency data indicate a strong slowdown in core inflation, with records of 0.6% in general inflation and 0.8% in core inflation for last week, according to Ferreres’ IPCOJF cited by Facimex Valores.
This trend is also reflected in the weekly measurements, being the lowest since June 2021 at the general level and February 2022 at the core level.
EcoGo, for its part, reports a weekly inflation of 0.2% in the Food category, after having registered 1.3% in the first week of the month. For its part, the Libertad y Progreso Foundation estimates a variation of 0.4% weekly, thus marking the lowest record in six months.
Regarding projections, Facimex Valores suggests that April inflation would have a floor of 11% in Greater Buenos Aires, and expects a strong slowdown in core inflation. They predict that the end of April inflation would be around 12.0% according to the CPI-OJF. Meanwhile, Libertad and Progreso project an increase of 9.0% in April, being the first single-digit variation since October 2023.
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Lautaro Moscheteconomist at the Libertad y Progreso Foundation, warned that “the slowdown in food prices is encouraging news, since it represents a large proportion of family expenses and is almost a quarter of the CPI.”
“In the first half of April, they rose 2.5% on average, while at the same time in March they had risen 6.3%. On the contrary, the greatest impact on the pocketbook continues to come from the regulated sector, which is recovering from the brutal distortion and freezing they suffered in recent years. This month the impact of the gas rate updates, prepaid, and to a lesser extent, communication and education services will be felt.”Moschet concluded.
Source: Ambito
