The wholesale inflation In October it stood at 1.2%, a figure that adds to the good performance of the Consumer Price Index (CPI) last month, which slowed to 2.7%. In this way, The Government is getting closer to reducing the “crawling peg” from 2% to 1%, change that the president himself Javier Milei announced, in case Inflation will remain low in the next two months. Given this, the city’s experts analyze what could happen with November data.
But first it is important to analyze what the Wholesale Price Index (IPIM) which was known this Tuesday. Within the 1.2% advance, it was evident that national products increased 1.3% and imported ones fell 0.5%, the second consecutive month in which they fell after the reduction of the PAIS Tax. “This is very positive new data regarding price dynamics over the past month,” they explained from Facimex.
In turn, from ACMexplained this data: “Imported products once again registered a variation below the national ones. Since they respond mainly to the exchange rate and the corresponding devaluation, The ‘crawling peg’ rhythm established at 2.2% monthly translated into a marked decrease in imported prices after the exchange rate jump registered in December. Furthermore, the recent evolution of international prices contributes to this trend.”
However, signs for November are mixed. Monthly metrics Orlando Ferreres show inflation a little higher than those measured Balance. Thus, on the one hand, in the end-to-end measurement of the last 30 days, the first recorded a 4% increase for the general level and 2.8% for the core. On the other hand, the variation between the last 4 weeks showed a price variation of 3.2% for the general level and 2.4% for the core.
For its part, Balance relief a general inflation of 2.4% and a core inflation of 2.6%when considering the variation of the last four weeks against the same immediately previous period. Looking ahead to November, Equilibra projects inflation of 2.6%, while Eco Go expects inflation of 3%in line with the projection of Facimex. In all the scenarios proposed, the CPI in November will be higher than that in October.
“In November, we hope that inflation register a little jumpgiven that seasonal products are pushing (partly due to holidays and vacations) and there is also an acceleration of regulated prices of around 5% as a result of adjustments to gasoline, gas, electricity and health, among others. Our measurement places the monthly variation for November at 3%“, they added from Eco Go.
Will the Government reduce peg crawling?
For the consulting firm Labor Capital and Growth (LCG)It is important to clarify that the IPIM moves differently than CPIsince the first of them has a greater weighting of the tradable goodssusceptible to the exchange rate. That was why, for example, in December from 2023, Wholesale prices in Argentina skyrocketed by 54% compared to the previous month, given the increase in the official exchange rate of 118%. Now, with a peso that appreciates against the dollar, the trend is the opposite, a stronger decline is seen in these types of products.
“The exchange rate moving at 2% monthly, but with a gap and expectations adjusting downwards, explains the lower wholesale inflation. The Government’s promise to advance a reduction in the crawling peg to 1% could encourage more accelerated convergencebut The risks of generating greater tensions in the exchange market due to diminished reserves could mean a brake on this convergence.“, they added from LCG.
From this consultancy, they also explained that the decrease in the IPIM was due to an opening of imports via reduction of tariffs and tariff barriers which, added to the reduction of the PAIS tax, had its correlation in wholesale prices. But they warn: “It will remain to be seen the effect of a reduction in ‘crawling’ and possible tensions that may arise from the exchange rate delay accumulated so far.and as in the retail case, analyze How price makers react to a stronger recovery in demand“.
Central Bank of the Argentine Republic BCRA
Mariano Fuchila
For the remainder of the year, they maintain that “wholesale inflation will be 2% monthly, which leads to closing the year with an annual inflation of around 70% measured in December.”
For its part, since Eco Goexplained why the Government needs reduce crawling peg, despite the fact that the exchange rate is behind: “With the money laundering dollars, the economic program was unblocked and the nominal value is beginning to compress, both in rates and prices. The next step will be the compression of the exchange rate, which is changing from being an anchoring factor of nominality to being a factor of inertiawhich induces inflation according to the economic authorities”.
Source: Ambito
David William is a talented author who has made a name for himself in the world of writing. He is a professional author who writes on a wide range of topics, from general interest to opinion news. David is currently working as a writer at 24 hours worlds where he brings his unique perspective and in-depth research to his articles, making them both informative and engaging.
