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Domingo Cavallo predicted what will happen to inflation and the measure that could change the scenario

Domingo Cavallo predicted what will happen to inflation and the measure that could change the scenario

The former Minister of Economy Sunday Cavallo warned that The inflation rate in the coming months will stagnate between 6% and 7% monthly and he maintained that it could be modified if the Government clearly communicates what the exit from the stocks and exchange rate unification will be like.

“Our forecast of stagnation of the inflation rate starting in June between 6% and 7% is based on the phenomenon of inflationary inertia that appears when the retrospective indexation of many of the economy’s prices begins, in particular the salaries, pensions, service fees and, probably, the pseudo-free exchange rate“said Cavallo on his personal blog.

Cavallo, who is the creator of the convertibility In the 1990s, he was one of the few economists who, when the first economic measures of the current Government were launched, predicted that inflation in April could fall to single digits.

In fact, for last month he estimated that the cost of living was around 8.5% and for May he expects between 6% and 7%, values ​​that will be maintained in the coming days.

The former Menem official bases his opinions on a survey carried out by his son Alberto Cavallo, who runs the consulting firm PriceStats and which collects data published on the Internet.

Cavallo considered that there will be a slowdown in the fall in the level of inflation because: “Starting in May, indexation mechanisms for the previous month will begin to operate for pensions, salaries and rates for services in general, including fuel. These will become factors of inflationary inertia that can hardly be neutralized by the adjustment of the interest rate. official exchange rate at 2% monthly”.

Likewise, he maintained: “The expectation of a devaluation jump will begin to influence at the time of the unification and liberalization of the exchange market, which can only be appeased if it is clarified in a credible manner how progress will be made towards an exchange and monetary organization that allows stability of the exchange rate. of free exchange and the breaking of inflationary inertia”.

Source: Ambito

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