Food once again casts a cloud of doubt on the floor sought by the Government

Food once again casts a cloud of doubt on the floor sought by the Government
Food once again casts a cloud of doubt on the floor sought by the Government

In thesecond week of June, food prices average a monthly increase of 4.8%according to data from the consultancy Labor Capital and Growth (LCG) and, during that period, an increase of 1.5% was recorded compared to the previous seven days.

The data suggest that, taking into account the rate increases planned for this month by the Government, as is the case of electricity and gas, It will be more complicated if at the end of the month the Consumer Price Index (CPI) falls until it pierces its floor of 4.2%.

However, the economic team seems be aspiring to have a 2% monthly floorsomething that seems complicated given the delay in the price of public services, which generates repressed inflation.

The Government’s inflation target is somewhat distant

The Economist Federico Furiase, recently appointed director of the Central Bank (BCRA)said through his account on the social network “nominality is converging to 2%.” He then maintains that the real (interest) rate is being “improved and the appreciation” of the peso against the dollar is softening. Likewise, he stressed that all of this is happening “with relative price correction”.

In fact, officials at the Treasury Palace have reasons to be optimistic about the data for the coming months. In a presentation for international investors and organizations, The Ministry of Economy made it clear that it thought, at the beginning of April, that May was going to close with inflation of 5.5%. The final data was 1.3 percentage points lower.

According to that same work, Economía predicts that the CPI of this month should end at 4.5%; expects 4.2% for July; for August, 4%; in September, 3.8%; 3.7%, he risks October, he put 3.5% in November and expects the same in December. The May number was actually two months ahead of the economic team’s initial estimates, but always taking into account that relative price corrections are missing.

salaries pesos parity income

The cost of living is very high for Argentines.


In the numbers for the fifth month of the year, it must be taken into account that the prices of regulated services grew 4%, while the Core CPI did so at 3.7%. This indicates that the government has room to adjust rates without raising the general monthly index too much.

For this it is It is necessary for the price of traceables to remain stable. In that sense, the data from the LCG consulting firm in the second week of June seem to go in the undesired direction. Food grew 1.5% compared to the first. That implies an accumulated of the first 15 days of 3.6% and a monthly average of 4.8%.

The price evolution of June

It is to be taken into account that in the first week of June Food prices did not register any variation, while they had closed April with an increase of 1.8%. In the second, What rose the most was the vegetables category with 3.9%, which has an impact on the index of 0.31%. Then, in order of importance, sugar, honey, sweets and cocoa, 2.8% with an incidence of 0.07%. But if the monthly variations are taken, In June, meat and dairy products explain most of the increase.

“Meat and Dairy explain 60% of the monthly increase,” with contributions to the general level of 1.14 and 0.92 points, respectively, indicated the entity, while Beverages and Bakeries contribute another 30%, in an index moderated by the deflation in Fruits, which subtracted 10% to 3.6 % general. And the Capital Foundation warns, in a recent study, that if the Government proposes to raise rates between June and December, The optimism of the economic team should be more moderate.

“With relative price adjustments pending, disinflation will find a brake in the third quarter”, supports the work of the entity directed by economist Carlos Pérez. The work, which was known a week before the INDEC reported 4.2% for May, anticipated that the record was going to be the lowest of the year, but around 5%. However, he clarifies that “this occurred within a framework of postponement of tariff adjustments (-2.3 points) “which is unlikely to be sustained for many months given the objective of zero fiscal deficit.”

The study warns that “with salaries that could begin to catch up with inflation, an exchange gap that cannot be ruled out showing some signs of tension again, fuel increases already scheduled, possible increases in regulated service rates and second round effects , It seems complex to break the general inflation record of 4% monthly towards the second semester.” “We expect inflation to rise a slight notch during the third quarter, contributing the regulated two monthly points,” the study anticipates.

Source: Ambito

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