This Monday the market expectations for the remainder of the year in terms of inflation and dollarwhen the Survey of Market Expectations (REM) published by the central bank. This is the last screening before the November 19 runoff.
In the monthly survey in which private analysts place their bets on both the price of the official dollar and inflation, it remains to be seen if for the gurus something changed in the last stretch of the electoral race that led them to modify their expectations. . In this sense, it is worth remembering that in the last survey, published in mid-October, analysts projected that the acceleration of inflation will cause another devaluation jump before the end of the year. According to the median of the estimates, The official wholesale dollar would close 2023 at $530, 51% above current levels. This additional 33% devaluation that the Argentine peso would suffer before the end of the year would push prices even further.
Dollar and inflation: what the last REM projected
For those who participated in the REM, the weight drop will not stop there. According to estimates, The official wholesale dollar would climb to almost $670 by January 2024, above $731 for February and $776 for March. For the next 12 months, meanwhile, the official exchange rate would reach $1,074, which implies that the peso could be devalued still 67% more in that period.
Thus, the analysts consulted by the Central anticipate a new devaluation and an acceleration of inflation before the end of the year. For the official exchange rate, they expect it to close 2023 at $530 per dollar, while for prices they anticipate that they will mark a new peak of 13.8% in December, bringing the accumulated inflation of 2023 to the area of 187%. We’ll see if anything changed in October.
So, financial experts have issued forecasts that paint a challenging picture for the Argentine economy. According to their estimates, the official wholesale exchange rate will experience a notable evolution in the coming months. At the end of December 2023, it is expected to reach $530 per dollar, marking the beginning of a devaluation process that will intensify in January 2024, reaching $669.63 and reaching its highest point in March, with a value projected $776.3. This forecast implies a devaluation of more than 100% against the dollar for the third month of next year.
Inflation: the data that comes according to the REM
Regarding inflation, the projections also present a scenario of economic challenge. For October, A 9.9% increase in the cost of living is expected, followed by a 10.6% increase in November. The year would conclude with a December index shot up to 13.8%. Furthermore, due to the predicted devaluation, a significant increase is expected in January 2024, with inflation of 15%.
Cumulatively, market analysts project that retail inflation will reach an impressive 180.7% during 2023. This upward revision, compared to the previous month’s estimate (173.2%), reflects the influence of the devaluation and the consequent price escalation that was triggered after the primary elections. This scenario presents significant challenges for economic stability, generating uncertainty and the need for careful strategies to mitigate impacts on different sectors.
The National Institute of Statistics and Censuses (Indec) will announce this Monday the variation of the Consumer Price Index (CPI) for October which, it is expected, will present a deceleration compared to September, which marked an increase of 12.7%.
According to specialists, “inflation in October was driven firstly for the field of Education, which climbed to 15.1%, driven by increases in private schools”.
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