Inflation and the dollar: why does the market warn that the new measures have an impact on prices?

The subtle relief brought by 6% of inflation for the month of June was quickly overshadowed by the firing of the casual dollar which, so far this month, has skipped a 11.7% or $58 scoring the most important shot of the last three months.

the treachery of green ticket accompanied the measures announced by the Government, which include the application of an exchange rate $340 special for dollarr with the aim of encouraging currency settlement of the regional economies and the expansion of COUNTRY tax from 7.5% to 25% for goods and services, with some exceptions. Also, he decided to match the value of the solidarity dollar with the of dollar card.

Starting this Monday, the market analyzes the impact that measures with special focus on the increase in the cost of imports and in the differential exchange rate for him corn which, could impact on andl price of basic foods such as milk and meatso the data of inflation of July and August could be overheated by these two factors: the soaring of the dollar and the new measures.

From the private sector, economic analysts warn that the main side effect It will be the rise in food prices, which, by the way, was exempt from the import tax, but that, by including corn in the agricultural dollar, the production costs of the field would be affected, which would end up having an impact on the consumer prices.

Blue dollar: the impact on inflation

For damian di pacedirector of Focus Market, regardless of the new tax issue, the reality is that it is in a context of shortage of reserves of the Central Bank and despite the disbursements of the IMF,”prices are positioning with the parallel“, so effectively it will not only impact inflation, warns the economist in dialogue with Scope, but it will also affect the Argentine productive system.

He explains that this is due to “the level of unpredictability of the BCRA in terms of reserves for the second semester is very important”, since the disbursements enough to cover the obligations with the Fund, but does not leave “a surplus“that can go to imports.

The economist expresses himself in the same sense Ivan Carrino, of Iván Carrino y Asociados, who is cautious when it comes to getting ahead to a blue dollar shock in the next measurements of the National Institute of Statistics and Censuses (INDEC).

Carrino points out that, it is “coming soon” to know what will be the impact of the shot from the parallel on inflation, since yes “correct down“, there would not be a significant impact. On the other hand, he did assure that, due to the rise in the agricultural dollar and the importing dollar, “There would be an impact of 1 or 1.5 additional points to the data that is expected for inflation in August”, which is why he sees it as very difficult for drop from 6% or 5% for the months that are to come

Inflation: collateral damage from new taxes

Claudio Caprarulodirector of the consultancy Analyticsindicates, for its part, that the main effect on inflation is given by the “new taxes on imports of goods and serviceswhich will be reflected both in the price index July as in August“.

And he adds that the increase in the cost of corn for the domestic market It impacts the price of the different variants of meat “since it is used in fattening animals”, so the consulting firm he directs is already estimating an extra increase of 3 pp in inflation between this month and the next.

Caprarulo also maintains that the jump in the Dolar blue of 4% would be a pressure of “Second order“Since it is a “recomposition with respect to inflation“, since the rest of the parallel dollars did not follow the same dynamicalthough he warns that this could change in the coming weeks and will have to be followed “closely”.

Due to the aforementioned, it is that, in general terms, the majority of private analysts do not adhere to the official diagnosis, which maintains that the measures will not have an impact on prices because the Government has traceability of which values ​​have already increased above the growth of the official dollar. The market view is that we will see a cascade effect in prices As a result of the increases applied in the exchange rates.