During the first trimester, the wages They seem to have hit a floor after the devaluation jump. However, a new increase in public services, which is already confirmed, would generate a major postponement of income recovery because inflation is expected to rise again.
This was reflected in a recent report by Focus Market where it analyzed how the current increases and the new increases that are expected for this month affect the salary.
“Everything seems to predict that salaries will take as a parameter the decrease in future inflation more than the past. For their part, joint ventures begin to beat inflation starting in April, however lag behind the loss of past purchasing power”began Damián Di Pace, Director of Focus Market.
“At the same time, in the second half of the year, the costs of regulated prices will begin to be paid, which, given the need to maintain fiscal balance, will begin to be released in public services. Any repressed price is paid upon release. If salaries begin to beat inflation in the face of a new average equilibrium of the variation of average prices in its core measurement the proportion derived from the income will begin to weigh on the pocket to the payment of regulated prices of public service rates,” he explained.
The salary outlook
The latest official data would indicate a floor for real wages at the end of the first quarter, considering the slowdown in inflation that would have continued until May and the impact of salary adjustments arising from joint agreements, many of which were applied between March and June.
Taking into account the update percentages for the current month, among the most representative unions, the adjustments of employees of metalworking industries (22.5%), construction (11%) and commerce (7%). Added to these is the automatic update included in the financial sector parities once the inflation data for May is made official. National state employees (9.1%) and Buenos Aires employees (7.5%), employees in the plastics industry (6%) and pharmacists (11%) will also receive salary increases in June, among others.
Public services: what increases are planned for this month
After postponing the rise in prices of regulated services in Mayin June increases are expected in several items and this turns on a yellow light on the recovery of the purchasing power of Argentines. Among the increases for this month, the increase in electricity and gas rates stands out.
In the first case, for N1 households the bill will increase by 22.85%, on a rate that was already being updated, while the removal of subsidies for N2 and N3 households will imply increases in the bill of 99.29% and 155%. .88%. In gas, adjustments of 9.27%, 32.98% and 9.81% are expected for households N1, N2 and N3, respectively. In addition, there will be a new update in gasoline and diesel (3.5%), drinking water service (Aysa; 2.77%), prepaid (8.8%), private schools (around 7.5%), tolls on Buenos Aires highways (35%) and rents (2.5%). Telephone, Internet and cable services will increase between 8% and 20%, depending on the plan and the operator.
The increase in regulated services It was estimated at around 17% on a weighted average according to their participation in the consumption basket. It is evident then that planned updates for the price of these essential services, which are added to the increases in other essential items (such as food)raise an alert about the possible recovery of families’ purchasing power, key data to face a path of economic growth. These results become even more relevant if we consider that the exercise includes exclusively formal workers (usually with salary improvements over the informal sector).
Increase in rates vs income: the estimate for the coming months
The report sought to analyze the potential impact in the coming months of the new updates to regulated services on the purchasing power of families.
For income, it was assumed that the salaries of registered workers grow on average 5.3% between July and September, in line with the inflation forecast by the BCRA’s Survey of Market Expectations (REM).
For prices, we take as a reference the core inflation projected by the market according to the REM to which we adjust including a higher increase than this core inflation for regulated services so that by September 2024 the relative price gap is closed sooner. mentioned.
In this way, the estimate shows an average monthly increase in retail prices of around 6.6% for the period between July and September. Under these assumptions, the The real salary of registered workers would once again have pressure regarding the increase in the prices of services compared to goods.
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“A third of a family’s consumption basket is concentrated in regulated or delayed prices of the economy that will begin to move. We are referring to public services such as electricity, gas, water, transportation and private services such as education, health and communications. Prices repressed people were always there and in the second semester will be the period where they will see the light of their liberation,” Di Pace concluded.
Source: Ambito
