“Inflation continues its downward trend in Argentina”highlighted the banking entity JP Morgan in coincidence with the Treasury Palace what commands Luis Caputo. The Consumer Price Index (CPI) for December accelerated slightly to 2.7% compared to 2.4% in November and was in line with market expectations. Despite this, the report highlights that the increase was expected by the “typical seasonality” of the last month of the year. He projected inflation of 2% for January.
Furthermore, the report states that after the drop in “crawling peg” from 2% to 1% starting in February, “A reduction in the interest rate is also expected in the coming days”. This could happen this Thursday, when the board of directors meets. Central Bank (BCRA). The meeting will be key, because it is expected that a new reduction in the rate will be defined, currently at 32%.
“To properly evaluate the timing of inflation, we adjust for seasonality (JP Morgan adjustment),” they highlighted in the report, where they specified that the CPI general registered 2.2% monthly“with the trailing three-month sequential pace declining further to 34.9% annualized.” “It should be noted that the momentum of the general CPI reached its peak in January 2024, when it reached 626% annualized,” they noted.
Inflation broken down
Although he general CPI was in line with the forecast JP Morgancore inflation did not suffer the same fate, but this acceleration was offset by a new deflation in seasonal prices. “Core inflation registered 3.2% monthly (+2.2 percentage points contribution to the general CPI in the month), slightly above our expectations. Meanwhile, our preferred core inflation metric (adjusting for core inflation by excluding food prices) recorded 2.7% month-on-month, slowing from 3% the previous month“, commented the entity.
“In the same line as the general CPI, when adjusting for seasonality, both underlying inflation metrics showed a strong deceleration, falling to 36% and 39% annualized in the last three months, respectively,” they added.
Food inflation
Food inflation accelerated in December to 2.2% monthly (+0.6 percentage points) from 0.9% the previous month and an average of 1.5% through November. The increase was driven by meat, which registered considerable increases of 7.9% and 4.7% monthly, respectively, according to JP Morgan.
“It is important to note that, when excluding fresh foods, the CPI for food registered 1.9% monthly, compared to 2.3% of the average for the last three months,” highlights the report.
Furthermore, the CPI of regulated prices again proved to be persistent in a 3.4% monthly (compared to the 3.3% reported last month, +0.7 percentage points contribution), driven by new increases in fuel, prepaid medical services, electricity and gas, among others. On the other hand, seasonal prices again surprised downwards, showing a deflation of 1.4% monthly (-0.2 percentage points of contribution), compared to -1.2% monthly reported last month, due to the aforementioned drop in the prices of fresh vegetables,” they concluded.
Source: Ambito
