After knowing January’s official inflation (6%), largely driven by meat increases, it is estimated that the evolution of retail prices will suffer a similar fate in February. According to economists who usually get ahead of their forecasts, the increase will be between 5.5% and 6.1%.
With these estimates, inflation on an annual basis will exceed 100%, after 98.8% in January, the highest value in 31 years. As highlighted by IERAL, of the Mediterranean Foundation, “in the event that the February CPI equal to or greater than 5.3%then Argentina will be back to the triple-digit inflation in the year-on-year measurement,” they point out.
In this second month of the year, in addition to the pressure exerted by the increases in meat prices and the seasonal nature of fruit and vegetables, there will be increases in regulated products and services (although they would slow about 3 points from January), about 4% in fuels; 6.6% in prepaid and 5% in domestic service personnel and 10% in telephony.
In case of foodconsultant survey GCL reflects a 6% monthly increase. “Even if on the contrary we will have to see the effect that the renewal of the Fair Prices program, which imposed an average increase of 3.2% per month vs. 4% in the previous version,” he cautioned.
According to this view, inflationary dynamics have not yet completely relaxed: presents “a high inertia coupled with a challenging electoral calendar (such as managing the currency gap in a drought context or the refinancing of the 18 trillion peso debt maturing between April and September) which could threaten revive expectations and price observations”.
“Our GBA CPI measurement saw an increase of 6.1% monthly between the first fortnight of February and the same period of January, realizing that January inflation rebound would consolidate”emphasizes Santiago Manoukian, head of research at ecolatin. The category that grew the most was the Core CPI (+7.3%), which reflects the trend of the general price level, excluding regulated and seasonal prices with a significant tax component, explained the consultant.
According to Ecolatina, seasonal prices moved by 5% (2.1 points less than in the first half of January), moderated by lower growth in clothing, vegetables (albeit above average) and some tourism-related items. Meanwhile, regulated prices have shown less dynamism than last month: they have increased by 3% per month.
Among the various items, the increase in food and beverage still stands out (+9.2%) and, in line with expectations, the increase in this division was mainly driven by the jump in beef prices (+22.2%), after the 40% increase in the prices of live cattle from the second half of January. In this way the meat explains almost 1.3 points of the increase in the general level.
For the consultant Echo Go, (one of the companies that came closest in its forecast to official January inflation data), this month, the general price increase will be close to 6.1%as revealed by economist Sebastián Menescaldi, who would give way 102.9% year over year. It happens that, in his weekly monitoring, he noticed that in the second week of the month the food indicator recorded a variation of 2.4% compared to the previous week. “With these data and considering a projection of weekly change of 1% for the following two weeks of the month, home food inflation rises to 7.3% per month in February”he detailed.
Other inflation estimates for February range from 5% estimated by the Equilibra consultant and 5.5% by C&T. In turn, the group of companies that provides its data to the Central Bank for the Survey on Market Expectations (REM) forecast – on average – an inflation of 5.5% for February. Meanwhile, the changes expected for the coming months imply average inflation in the first half of around 5.7%.
MAP Economic & Business Advisors projections indicate that “inflation would accelerate again this year to 103.5%, with an average monthly increase of 6.1% between February and December”, revision.
Among the factors that may support the inflationary low, according to analysts, there are inflationary inertia itselfwith contracts negotiated due to past inflation and mounting union pressure in an election year; the adjustment of the price of public servicesas the removal of subsidies will affect retail prices; supply restrictions due to lack of dollars to import is one less fiscal discipline in the context of the election year in which the authorities could resort to an increase in social spending to improve their chances at the polls.
Source: Clarin
