Wholesale inflation slowed to 0.8% in December and in 2024 it accumulated almost half that of the CPI

Wholesale inflation slowed to 0.8% in Decemberits most limited variation since the beginning of the Covid-19 pandemic. Thus, in 2024 it accumulated an increase of 67.1%almost half of the increase in retail inflation.

Although they do not have the greatest impact on the INDEC’s Internal Wholesale Price Index (IPIM), The grade of the month and the year was given by imported products. Within the framework of the elimination of the PAIS Tax, these articles had a deflation of 1.6% in December, while during the year they advanced only 2.4%.

Furthermore, the exchange rate appreciation derived from the official management of the value of the dollar functioned as an anchor, both for goods coming from abroad and for national ones.

The reduction in taxes and the exchange rate appreciation depressed the prices of imported products

In November The Executive Branch had decided to eliminate the obligation to advance 95% of the aforementioned tax to access foreign currency to pay for imports. This impacted the December data, since it compares prices as of the 15th of that month with prices as of November 15th.

It is worth remembering that, after the initial increase in the PAIS Tax, during the last part of the year the Government gradually reduced taxes on foreign trade, also through the elimination of tariffs and tariff measures.

In parallel, the defense of the “crawling peg” at 2% monthly throughout the year, which put a ceiling on price adjustments of products purchased abroad, at the official exchange rate.

The economist Salvador Vitelli he recalled in dialogue with Scope that since September there had been declines in imported goods, coinciding with the beginning of the gradual reduction (and then eradication) of the COUNTRY Tax.

How was the dynamic in national products?

Regarding national products, the division that had the most downward pressure was manufacturing, which during the year had an increase of 69.5% and in December of 1.6%. Particularly noteworthy were increases of less than 30% annually in rubber and plastic products, and metal products. Meanwhile, food and beverages, and refined petroleum products, two segments with important weight in the IPIM, showed increases of 88.6% and 133.2%, respectively.

The primary products increased 88.2% annually, but in December they fell 0.7%. Agriculture showed the smallest annual variation (78.6%), while oil and gas was the division that most boosted the indicator upwards within this group (+101.1%).

With these numbers, after the strong jump they had in December 2023 after the devaluation, wholesale prices rose in 2024 almost half that of the Consumer Price Index (+117.8%). It should be noted that both benchmarks measure different things; While the first takes into account many more products that can be traded abroad, the second includes more “non-tradable” goods and services.

“Wholesale prices are largely affected by the crawling peg because they are mostly tradable goods. That is why national products had a strong rise in December, January and February, but then they calmed down,” Vitelli elaborated on the matter.