April inflation broke double digits for the first time in six months: It slowed down to 8.8% and in one year it accumulated 289.4%, as reported on Tuesday the National Institute of Statistics and Censuses (INDEC). In this way, it chained its fourth consecutive month with a declining trend, to touch the lowest figure since last October in monthly terms. It was a figure celebrated as “a victory” by the president Javier Milei, although economists warn that it responds to the fall in consumption.
The official statistics body added that the CPI in the first four months of 2024 reached 65%. Inflation was 25.5% in December, and since that moment the variation has registered a downward bias to 20.6%, 13.2% and 11% in January, February and March, respectively. The official monthly data was slightly better than expected by analysts who predicted a median increase of 9%according to the REM of the BCRA.
After getting the April data right, the consulting firm EcoGo has already provided its projection for the fifth month of the year.
Thus, the consulting firm that heads Marina Dal Poggettorecognized for its accurate predictions on the monthly INDEC index, analyzed the first two weeks of May and cIt included an inflation of 4.6% for that month.
Inflation: what the consultant said
This data is preliminary and subject to change, but represents a notable reduction compared to previous months. The increase observed compared to last week is due to readjustments in the health category, especially in prepaid ones, despite the CNDC sanction that forces some providers to lower their prices.
In addition, the consulting firm highlighted a positive trend: a reduction in the number of products that increase in price and an increase in products whose value decreases. Year-on-year, inflation is expected to reach 289%a slight drop compared to the 289.4% recorded in April, which would mark a real decrease in the era of the Milei Government.
In the food sector, one of the most sensitive for consumers, EcoGo reported an increase of 1.3%, consistent with previous weeks. With the increases projected for the rest of the month, it is estimated that inflation in food consumed at home will rise to 5.1% in May.
Inflation: what to expect in May
May began with a slight increase in the LCG Food and Beverage Price Survey, then of a fifth week of April with falling prices. Likewise, the percentage of products with increases seems to have stagnated at 25%although products with falling prices increased their representativeness and positively influence the general index.
However, We have to wait when the postponed regulated increases fall and how they affect other items in the second rounds. We understand that “the notable slowdown in inflation is explained by the collapse in demand,” they say at LCG.
The real test to see if we enter a new regime of lower inflation will have to be done with economic activity picking upeither and salaries cutting some of the decline of recent times. Only then will we be able to see if inflationary expectations are really anchored.
Furthermore, the 2% crawl in the official exchange rate continues and there does not seem to be any noticeable changes in the short term. It remains a question what the exchange rate outcome will be like after these months where the exchange rate served as an anchor. The bet seems to be that inflation falls quickly enough and the pace of delay slows down. Exchange stability may remain for a couple more months, if it is decided to maintain the stocks.
But later, with imports already regularized, there will be new pressure for an increase. From LCG they expect inflation of 180% annually by December, with peaks of 290% in the coming months.
Source: Ambito
