Next Tuesday, INDEC will release the consumer price index (CPI) for February. The discussion is open whether it will be placed a few tenths above or a tenth below 6%. What is clear is that it will be official confirmation that inflation over the last twelve months already exceeds 100%a record for the first time since 1991.
This jump in inflation coincides with greater price inertia which is reflected in an acceleration in the observation rate.
This is demonstrated by a survey by the consulting firm EcoGo In the last four weeks, the set of household consumption basket prices which recorded variations reached 80.1%. That represents a sharp jump, given that three months ago that index was around 30%.
Even from the consultancy company LCG they see signs of it redials are increasingly popular.
For LCG in the first week of March, the percentage of products with weekly increases was 40%, 15 percentage points above the average change of the previous four weeks. This is the second highest percentage so far this year, surpassed only by the fifth week of January when it reached 44.8%. This measurement measured the prices of 8,000 food and drink items from five supermarkets.
A year earlier that percentage was 17%. “Prices continue with their high inertia,” says Guido Lorenzo, director of LCG. “Everything we see on average over a month is up-to-date. Even though inflation has come down, that inertial component remains high and can’t be broken. with which, going forward, it is difficult to think of a sharply decelerating inflation”.
A survey by GMA Capital economist Nery Persichini shows that prices double every 12.1 months. In 2005, when annual inflation was 3.7%, it took 120 months for the CPI to double.
“The speed of price doubling is directly related to inflation. It’s the other side of the coin. But the higher the inflation rate, the greater the price dispersion in the economy. Thus, there were items such as clothing and footwear (up 120.6% year-on-year), whose prices doubled in just under 11 months,” Persichini says.
Adding to the increase in products in the basket is the fact that more and more contracts are adjusted for inflation.
Earlier this month, the The government has announced that fares for buses and trains will be updated monthly according to the inflation index. Therefore, this entry has been added to the list of contracts that increase by CPI.
This list includes forward UVAs, the investment option that pays a few tenths more interest than inflation and which has been instrumental in keeping the pesos in the banks. UVA, pledge and mortgage loans are also included in this lot.
AQ
Source: Clarin
