The Minister of Economy assured that in December inflation usually presents higher values due to the holidays and the proximity of the holidays.
The Minister of Economy, Luis Caputo clarified that the acceleration of inflation in December responded fundamentally to seasonal factors. In that sense, he chose to compare the data against previous Decembers, which leads to finding the smallest increase for the month in question since 2018.
This Tuesday the INDEC reported that the Consumer Price Index (CPI) climbed 2.7% in the last month of the year, thus surpassing the 2.4% increase that it had presented in November. This figure, for the official, “confirms” the continuity of the disinflation process. “This occurs in a month in which The index presents a positive seasonality, linked to the holidays and the beginning of the summer vacation periodand in a context where both economic activity and the real income of the population show a strong recovery“, Caputo said on behalf of X.
“Indeed, the Monthly Economic Activity Estimator (EMAE) accumulated a growth of 23% between December 2023 and October 2024. Meanwhile, salaries in the registered private sector (SIPA), pensions and the Universal Child Allowance (AUH) showed an increase in real terms of 15.4%, 12.8% and 107.4%, respectively, in the first eleven months of the year,” added the head of the Treasury Palace.
In that sense, he completed: “Unlike other opportunities, the growth in the real income of the population and credit to the private sector occurs as a consequence, and not to the detriment, of the macroeconomic order. The deepening of disinflation and the return to the private sector of resources that until 2023 were destined to finance the public sector, allow this expansion to be genuine and sustainable“.
In addition, the official highlighted the new slowdown in the interannual variationwhich was located in the 117.8% and capped its eighth consecutive month of slowdown.
“It should be noted that the inflation announced today was the lowest for a month of December since 2018,” he stated, regarding the comparison of the CPI of the different Decembers of recent years.
“The continuity of the disinflation process can also be seen in the analysis of moving averages of the variation of the CPIsince it allows trends to be extracted beyond very short-term volatility. Along these lines, the 3-month moving average was 2.6% monthly (-0.3 pp vs. November 2024), the lowest record since September 2020,” he concluded.
After the inflation data, the BCRA lowered the “crawling peg”
The monetary authority decided to lower the pace of controlled devaluation of the peso from 2% to 1% despite the slight inflationary acceleration, which is attributed to a seasonal factor.
“In a context of recovery of economic activity and seasonal increase in prices, both the inflation of recent months and high-frequency observations confirm a downward observed inflation and below the expectations gathered in the market. The adjustment for The exchange rate continues to play the role of a complementary anchor in inflation expectations,” argued the Central Bank.
Source: Ambito
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