After the December inflation data that marked a slight increase and the announcement of a reduction in the crawling peg, economists adjust their forecasts and estimate what will happen in the coming months.
December inflation remained below 3% for the third consecutive month, strengthening the Government’s strategy of consolidating the downward trend. In this context, and after the reduction of the crawling peg to 1% monthly, several analysts began to adjust their inflation projections for this year. From the Casa Rosada, The goal is to break the 2% barrier. In this context, one of them anticipated when will be the month in which inflation will reach 1%.
Ricardo Delgado, director of the consulting firm Analytica, referred to the inflationary slowdown and ventured to answer when the Consumer Price Index (CPI) could register a figure with a “1” at the beginning.
Will it be able to drill 2%? Inflation projected by Delgado for February
“If you compare annual inflation, you see that it closes at around half the level of 2023, which represents an important achievement,” highlighted Ricardo Delgado when referring to the inflation data for December.
In an interview with CNN Radio, Delgado related the decision of the Central Bank to reduce the monthly devaluation of the peso with the Government’s objective of bringing the Consumer Price Index (CPI) below 2%. “Hence the decision to lower the crawling peg from 2% to 1%, with the purpose of overcoming the challenge of breaking this 2% monthly threshold, which is increasingly complicated,” he explained.
Regarding the evolution of prices in the coming months, the economist was optimistic and estimated when the objective set by the Casa Rosada could be achieved.
“The initial indicators for January, especially in the food and beverage sector, reflect a slight acceleration. It is unlikely to close with inflation below 2%. SHowever, it is possible that in February or March an index that begins with 1 will be recorded,” he said.
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Exchange delay and a comparison with the end of convertibility
In the midst of the debate between Javier Milei and economists like Domingo Cavallo, who warn of a possible exchange rate delay, Ricardo Delgado analyzed the relationship between the exchange rate and inflation.
“When seeking to reduce inflation, it is essential to consolidate a fiscal surplus and maintain it. However, Maintaining a fixed exchange rate can make production in Argentina more expensive“he warned.
The economist added: “This problem has already been observed in other economic programs, as occurred during convertibility, c“Its outcome was extremely adverse”referring to the crisis after the end of parity between the peso and the dollar in 2002.
Source: Ambito
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