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City analysts predict that it will stagnate above 5% in the next four months

City analysts predict that it will stagnate above 5% in the next four months

According to the latest REM, the average inflation projection for 2024 fell to 146.4%. Consultants estimate a CPI of 5.2% for May, but they already anticipate a slight rebound in June and stagnation at high levels for the remainder of the year.

The inflation projections of City analysts were cut again, according to the latest Survey of Market Expectations (REM) published this Thursday by the Central Bank and which was carried out during the last days of May. Now, consultants predict that the consumer price index (CPI) will close 2024 with a year-on-year increase of 146.4%, that is, 15 points less than in the previous survey. However, the REM showed a challenging scenario: starting in June, the monthly slowdown will stop.

The median of the projections of the analysts consulted by the BCRA for May showed a considerable decrease. Now, the City consensus expects monthly CPI of 5.2%. This is 2.3 points less than what the same respondents had predicted a month ago. This would mark a new monthly slowdown in the CPI since for April the INDEC reported an index of 8.8%. The official data for May will be known next Thursday.

However, not all of it is good news for a Government that seeks to show the continued slowdown in inflation as a triumph. According to the REM, this process would have already been stopped, as suggested by the high-frequency measurements of several consulting companies in their measurements in recent weeks.

It happens that the BCRA survey recorded an average forecast of 5.5% for the June CPI. If confirmed, this would imply a rebound of the monthly indicator for the first time so far this year, after December’s inflation flash (triggered by the megadevaluation) was followed by downward measurements. It should be noted that the Central survey was carried out between May 29 and 31, that is, before the new rate increase that will impact inflation this month was made official.

But perhaps the most salient fact that the survey (conducted among 36 consulting firms, research centers and banks) shows is that the consensus of City economists is that inflation will stagnate above 5% during the next four months and which will remain at high levels for the remainder of the year. A message that indicates that the resistance to the drop in nominal value will be increasingly important, at a time of the year when it will be more difficult for the economic team to add reserves (in fact, the BCRA is expected to become a seller) and in which it will face the most unfavorable seasonality in fiscal matters.

Specifically, the median inflation projections are 5.5% for July (same level as for June), 5.2% for August, 5.3% for September, 4.6% for October and 4.5% for November. These are very high levels, even more so if one considers that they occur in an economy that is going through a deep recession.

News in development.

Source: Ambito

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