With October’s official inflation on the table -6.3% as INDEC reported on Tuesday – the advisers adjust their forecasts for the year and the price deal which took effect last week does not appear to deviate much from their calculations.

As calculated by JP Morgan bank, the price freeze program it would only subtract about 0.3 points from monthly inflation.

“The government last week announced a price freeze program for 2,000 products and a pledge by business owners not to raise the prices of 30,000 products by more than 4% a month over the next 120 days. According to our estimates, and assuming that price controls will only be effective for supermarkets, the Fair Prices program will subtract about 0.3 points from monthly inflation over the next 4 months,” the bank explained.

Therefore, it is likely that the rate increases expected, in addition to wage pressures and non-tradable services, prevent a significant drop in inflation in the coming months, the entity believes.

In fact only the rate hike – electricity (+18% on a monthly basis), gas (10% and water (25%) in November and public transport (40%) in December – will add about 1.5 points to inflation general in the last two months of the year, they say.

“On the other hand, drought will also exert, which affects the supply of grain upward pressure on food prices, while meat prices, currently low, could increase in the coming months as weather conditions return to normal. In total, our base case assumes an average monthly inflation of 6.2% in the November-December period, with inflation closing the year at 99%,” reads the report.

It’s the same forecast I had before the inflation announcement in October, which was slightly lower than the entity’s expectation, which was forecast at 6.5%.

What can happen in 2023

“If there are no changes in the policy framework, inflation in December 2023 will accelerate above 110%,” they added in a report to their clients.

“In the midst of high (and rising) pent-up inflation, which we estimate at 12.5% ​​for December 2022, we expect inflation will accelerate even more next year, as the government will try to get to the October elections by maximizing the current political framework”, calculated in JP Morgan.

“Our base case assumes monthly inflation of 6.2% on average in the first half of 2023, and accelerating to 6.8% in the second half, in the midst of a larger gap between the official and parallel exchange rates and to grow fiscal and monetary imbalances entering the electoral cycle.

In the budget, they expect a devaluation by the end of next year: “Let’s also assume an official exchange rate correction at the end of 2023 following the inauguration of a new administration in December”.

“We continue to insist that changes to the current economic policy framework aimed at narrowing the exchange gap and a credible and focused early-stage fiscal consolidation effort remain necessary conditions for reducing inflation and rebuilding reserves sustainably In the absence of such efforts, consistent with an orthodox stabilization programme, we expect inflation to continue its acceleration next year, marking December 2023 inflation at 112%, with risks still tilted to the upside,” he said. concluded the bank.

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