The report, which will be published this Wednesday at 10:30 am in Argentinaforecasts general inflation of 2.9%, an increase compared to the 2.7% annual rate recorded in November. Consumer prices are expected to have risen 0.4% from the previous month, surpassing the 0.3% monthly increase seen in November.
Seasonal factors such as rising fuel costs and the persistence of food inflation would keep general indices elevated.
In “basic” terms, excluding the volatile costs of food and fuel, an increase of 3.3% is projected compared to the previous year, for the fifth consecutive month. Economists also expect monthly increases in core prices to remain at 0.3%, according to Bloomberg data.
Market projections
“Inflation appears to have stalled moderately above the Fed’s target,” Bank of America economists Stephen Juneau and Jeseo Park wrote in a preview of the report.
Core inflation remains elevated due to the costs of housing and services such as insurance and health care. Basic services are expected to be little changed in December, following upward surprises in airfares and accommodations away from home in the previous report.
“These categories should moderate in December,” Juneau and Park said. “Housing prices have decreased relative to early 2024, but there is still room for improvement.”
The team expects rental prices to rise again by 0.2% month-over-month, while the owner’s equivalent rent (OER) should increase slightly by 0.3%.
The Fed’s next challenge: a new administration
Although inflation has been slowing, it still exceeds the Federal Reserve’s 2% annual target.
The election of Donald Trump as the country’s next president has further complicated the outlook. Some economists warn that the US could face a new inflationary resurgence if Trump follows through on his key campaign promises. The president-elect will take office next week.
Trump’s proposed policies, such as high tariffs on imported goods, corporate tax cuts and immigration restrictions, are seen as inflationary. These measures could further complicate the central bank’s path on interest rates.
In addition to political uncertainties, recent inflation rates have been elevated heading into the new year, although producer prices showed some relief in data released Monday.
“December CPI is likely to be unwelcome by the Federal Reserve,” Oxford Economics Chief US Economist Ryan Sweet wrote on Friday. Sweet noted that December’s strong jobs report reinforces the pause in interest rates later this month, especially as central bank leaders have indicated they will take a more gradual easing approach.
As of Tuesday, markets remain divided on whether the Fed will cut rates by 25 basis points in the second half of this year, with the odds of a June cut around 40%.
“We expect the Fed to cut rates three times this year, but the jobs report raises the risk of fewer cuts and the Fed not cutting rates as soon as March, which is currently our baseline. “Sweet wrote in a separate report. The economist said he needs more evidence of improvements in the labor market before adjusting his forecast.
Meanwhile, Bank of America revised its projection to zero rate cuts this year, and even warned that an increase could be on the table.
“Inflation is stuck above target, with risks tilted to the upside, activity is strong, and the labor market appears to have stabilized,” Juneau and Park concluded.
Source: Ambito
I am an author and journalist who has worked in the entertainment industry for over a decade. I currently work as a news editor at a major news website, and my focus is on covering the latest trends in entertainment. I also write occasional pieces for other outlets, and have authored two books about the entertainment industry.
