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They predict more inflation without recovery of activity

They predict more inflation without recovery of activity
They predict more inflation without recovery of activity

According to CAME’s analysis, 77% of the businesses consulted thought that this date “will help improve sales” of the month, although it will not be enough “to avoid a fall” compared to last year.

In addition, it was noted that many businesses offered “payments in installments without interest” and “discounts for cash payments.” The trend of collective purchases “among several family members” with the aim of purchasing “wholesale” products and saving was also highlighted.

Salvador Femeníaspokesperson for the entity, assured in radio statements that, in the current situation, a program intended toreduce inflation and stabilize the economy not enough to generate a recovery“economic and that view coincides with that of other analysts who already admit that it will be very difficult for a new decrease in the cost of living to be seen in June, as a consequence of the rate increases and the increase in food and beverages.

Inflation and the rebound in June

Variation is expected between 5 and 6% due to the resumption of increases in electricity and gas rateswhich had been postponed the previous month, and the signs of acceleration in food prices, according to the consulting firm EcoGo.

The Government has begun to adjust prices, which in November were 42% behind in real terms. In May, increases were paused to prioritize lowering inflation, which could generate greater pressure in the future, according to experts.

The Minister of Economy, Luis Caputo, decided in June to resume increases in electricity and gas rates by eliminating subsidies for middle and low-income sectors. The consulting firms calculate that the impact on the Consumer Price Index (CPI) It will be between 1 and 2 percentage points. To this will be added an increase of 4% on average in fuel and the increase in the price of the subway.

According to Capital Foundation, disinflation could be interrupted in the coming months. Experts also mention the difficulty of exiting the exchange rate, with many pesos and no dollars in the Central Bank, and the uncertainty about how this exit will be handled, highlighting that the competition between currencies with flexible exchange rate and dollarization seems more like a competition of exchange rate regimes than a sequence of complementary steps.

Inflation would be around 5.7% monthly in the third quarteralthough if it is decided not to move forward with rate increases in the last quarter, it could return to previous levels, according to the entity.

Private estimates observe an acceleration in food prices. LCG reported an increase of 1.5% in the second week of the month, while EcoGo recorded an increase of 0.5% in the first week, a slight increase compared to the previous week.

The LCG report indicates that vegetables, sugar (along with honey, sweets and cocoa), and drinks and infusions were the products that increased the most in the second week of the month, with increases of 3.9% , 2.8% and 2.4%, respectively. They were followed by dairy products and eggs, with 2.3%, and baked goods, cereals and pastas, with 1.9%.

The FIEL Foundation reported an increase of 3.8% in the first week of June, of which 1.2 points correspond to increases in electricity and gas rates, breaking the downward trend. Added to this is the increase in the Fuel Transfer Tax and its transfer to the price of gasoline.

According to the latest Market Expectations Survey (REM) from the Central Bank, in June inflation will rise to 5.5%, a slight difference that indicates a brake on the decline and a slight rebound in prices. In the last year, food prices have increased by 290%.

food fruits vegetables inflation supermarkets consumption prices

Reuters

The most significant change in consumption has been that many households stopped consuming meat and fish because their prices became prohibitive. This caused an 18% drop in meat consumption during the first four months, according to the Chamber of Industries and Commerce of Meats and Derivatives of the Argentine Republic (CICCRA). In the case of fish, the most expensive can cost up to $30,000 per kilo.

Sausages have also increased considerably, reaching $40,000 per kilo, as in the case of raw ham. Vegetables have also experienced strong increases, which could put pressure on June inflation.

The acceleration in food prices in recent days coincided with the increase in the prices of alternative dollars, which has generated concern about its impact on the June price index.

It is likely that inflation will not fall below 5% and we will have to see how far it goes“explained a consultant specialized in consumption.

Source: Ambito

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