Orlando Ferreres’ high-frequency indicator showed a slight acceleration in inflation in the first two weeks of August. This month will see increases in gas, electricity and transport rates, and analysts expect that it will be unlikely to break through the 4% threshold. The government is betting that the price level of goods will fall in September with the reduction of the country’s tax, but industrialists warn that they need to restore profitability. A group of businessmen who spoke with the economic team left with the base scenario that in 2025 there will be a new season of the cepo.
Unlike other occasions, this week the official celebration of the inflation data was lukewarm. When looking at the film of the last three months, it can be seen that the disinflation process is beginning to encounter difficulties: 4.2% in May, 4.6% in July and 4% in July. despite having postponed increases in rates, fuels and with consumption at lower levels than during the 2002 crisis and the pandemic.
August does not bring good news. High-frequency data measured a slight acceleration of inflation in the first half of the month. For Orlando Ferreres, the average measurement for the second week of the month compared to the second week of July was 4.3% monthly.. Analysts consulted by Scope They considered that it is very difficult for inflation to break through 4%.
Doubts about the Country Tax
Economy Minister Luis Caputo predicted that inflation will reach zero before the end of the year or that there may even be a deflation scenario. With August out of the picture, the government is now betting on September as the month in which a more significant collapse is expected to give credence to this forecast.
Especially since that is the date indicated to reverse the increase in the Country Tax that Javier Milei implemented at the beginning of his administration. The tax would then go from 17.5% to 7.5%. Caputo wants prices to be transferred, but different sectors of the local industry are already anticipating that a significant drop will hardly be perceived.
For examplethe automakers, which have a higher degree of imported components, warn that they need to restore profit margins due to the increase in costs they endured in the first part of the year and food manufacturers, with greater weight in the CPI, that the interference of imported inputs in their structures is less.
In addition, definitions are missing. The Country Tax is reduced in September, but on the first day of the month or the last? The question was raised by economist Amílcar Collante in his X account and the question is eloquent, the INDEC measures prices throughout the month and depending on the precise moment it is done, it can have more or less weight in the September index.
At this time, everything indicates that the reduction will only apply to goods, not to services and not to credit card purchases abroad.
Is the 2025 season of the cepo coming?
“The numbers don’t add up, there are no dollars to open the trap,” said a businessman who met with the economic team in recent days. According to the businessman, who sees the unification of the exchange rate as the main factor for his sector, the reasoning was partially recognized by officials from the Ministry of Economy.
That’s why, after discussing the matter with the authorities, he told his colleagues that the base scenario is that the restrictions will continue throughout 2024 and probably also during 2025.“There may be some partial relaxations, but based on the proposal made to us, next year there will still be restrictions and also a dollar blend,” he concluded.
The 2025 season would not be exactly the same as the 2024 season. In any case, they would be new episodes of the restriction. Some even took Javier Milei’s words at the Council of Americas as a kind of implicit confession: “It is false that growth cannot be achieved with restrictions, it is a fallacy.”It could be the “spin off” of a series that has much more pragmatism than any libertarian could have imagined.
Source: Ambito
