Wholesale inflation slowed to 3.5% in May, the lowest since December 2021. Although it was the fifth consecutive monthly reduction, the interannual variation has not yet managed to reach 300%.
The rise in the Domestic Wholesale Price Index (IPIM) constructed by INDEC was explained by the increase in national products, which rose 4% compared to April. Among these, the increases in primary products stood out (+7.3%), particularly in oil and gas (+8%), cereals and oilseeds (+9%), and vegetables and legumes (+39%)the latter with a significant impact on tomatoes, whose value skyrocketed largely due to the low temperatures that affected the crop a few weeks ago.
For its part, national manufacturing presented a monthly increase of 3.1%. Within the five items with the greatest weight in this segment, the increases in chemicals and substances (+4%)where pharmaceuticals represent the majority, and in refined petroleum products (+3.7%)which have gasoline and diesel as their main components.
Meanwhile, food and drinkstextile products, and machinery, all important divisions in the IPIM, presented variations below the general average.
Deflation in imported products
In addition, The prices of imported products showed a monthly deflation of 2.1%, which implies that they have not increased since February since in March they had fallen 1.7% and in April they had not registered changes compared to the previous month. It is worth noting that within these articles, the most important are chemical substances and products (mainly plastic substances), general and industrial machinery, and electronic products.
In this regard, the chief economist of EPyCA, Florence Fiorentin, He maintained that this drop in the value of products coming from abroad may have to do “with the stock reduction strategy of these products.”. As an example, a collapse of close to 80% year-on-year in imports of cell phone parts during the first four months can be used as a reference.
Additionally, Fiorentin added that The 2% monthly adjustment rate that the Central Bank is applying to the official dollar also influences this dynamic. of prices since “it gives more predictability to imported products than to national ones, which have been increasing above the exchange rate.” “Given the drop in consumption, it is advisable to reduce prices on imported goods,” she said.
Wholesale prices rise less than retail prices: is it a good omen?
Wholesale prices had just faced an extraordinary jump in December of last year, with increases of 80% in imported products and more than 50% in national items, affected by the devaluation implemented by the Government of Javier Milei a few hours after his inauguration. arrival at Casa Rosada. Since then, price adjustments have been experiencing a sustained decline.
In monthly terms, the IPIM has been rising below the Consumer Price Index (CPI). This is reflected in the fact that in the first five months of the year, the accumulated wholesale inflation was 46.6%, well below the retail inflation, which was 71.9%.
Although both indices are declining, From EPyCA they see that “they have already hit a floor”. “Just because they have fallen does not mean that they will remain at that level, because the decrease was due to the fall in consumption and the recession. The increase in services and gasoline mark an inflation floor,” said Fiorentin.
Furthermore, it is necessary to emphasize the difference between the IPIM and the CPI, since the former takes the majority of products tradable abroad, while the latter takes “non-tradable” products.
Unlike what happens with the monthly comparison, In interannual terms, the IPIM grew above the CPI and for the fifth consecutive month it rose above 300%, specifically 302.5%.
Compared to May 2023, the most significant increases were observed in oil and gas (+350.6%), refined petroleum products (+410.6%), and chemicals and substances (+348.7%).
Source: Ambito
