Inflation data for January, 6% and 98.8% year-on-year, it further complicates economic activity and management. For now, with the aftermath of February plus this month’s price increase, it dismisses Sergio Massa’s claim to have inflation down for this first quarter and comply with the guideline of 60% of the national budget.
An important fact is that the regulated prices – so called because they depend on the decision of the national government or of the provinces – increased by 7.1% (7.5% in Capital and GBA) indicating that part of the inflationary pressure derives from the official decisions themselves.
Another important figure is that the average 6% falls to 5.4% in commodity prices ea 7.7% in the prices of services, such as prepaid cards, free time, tourism, which have a greater impact on the medium sectors. In this way, without decreasing the inflationary pressure of the food – increased by an average of 6.8%– which affects the low-income sectors the most, now the pressure of interest rates and prices on the middle class is intensifying.
Also from the INDEC Report it is highlighted that in one of the regions strongly affected by poverty – NOA (Northwest) the CPI was up 6.3% with food up 8.1%.
On the other hand, 6% leave a Strong pressure on March when the return to classes triggers inflation in Education that both in December and in January had almost no variation.
In turn, both the exchange rate and the interest rate could be affected by this price increase. The Central Bank must define the official peso devaluation rate as follows and whether it maintains the fixed-term interest rate because the financial placements in pesos have been misplaced. But it carries the risk of further indexing the debt of the Central Bank itself.
It also complicates the de-indexing of prices and wages sought for contract negotiation and employment contracts that begin effective in March and April. There is already tension in the wage negotiations of Bankers and other unions, coinciding with the expiry of the renegotiations agreed in the second half of 2022, which must now end with higher wage increases.
On the other hand, the percentage of inflation shows that the so-called “fair prices”, one of the tools on which the Economy has relied to “keep” the inflation rate, has not given results, to which is now added the effectiveness that could have the agreement on the prices of some cuts of meat.
Source: Clarin
