The 6.6% increase in inflation in February, which took the inter-year change to triple digits (102.5%), exceeded consultants’ estimates and also generated severe turmoil among officials. However, monthly price index (CPI) data may just be a tip of the iceberg of the problem as inflation “suppressed” by the lag of regulated prices, is hiding the true extent of the price increases.
It happens that over the past three years, arrears have accumulated in tariffs for services such as gas and water, transport, health care and other items that have regulated prices. Had those prices been adjusted for the pace of real inflation, the data reported by INDEC on Tuesday would have been much higher.
“If the government corrects the crackdown on regulated prices since Alberto Fernández took office, those prices would have had to go up more than 40 points and that would have impacted an additional 10 points of inflation”calculates the economist Andrés Borenstein.
“With a regime of high inflation like the one we have, prices always run at different rates until there is an anchor, a compass or something to order them,” explains the Analytica economist, about the concept of ” pent-up inflation”. Ricardo Delgado. «The references are lost and the competitions become more chaotic – he says – For example the price of fuel: that 3.8% increase established by the oil companies it lags the CPI again. Not to mention the salaries,” she says.
According to the analyst, the exchange rate has fallen by about 30 points since the start of the current administration, in December 2019. They haven’t managed to make up for that delay yet.” he pointed.
Among the prices that are “pressed” by economic policy so that inflation does not get out of hand, there are also Prices careful, the program promoted by the Secretariat of Commerce to limit the increases in the basic products of the basket. “These are products that, if left according to market rules, would cost more,” says Borenstein.
Another recent example of suppressed inflation was that of meat, which represents 9% of the CPI. This staple spiked inflation in February with a 21% monthly increase, accelerating by more than 17 points compared to January, which already left a high value. It was a “recomposition of prices due to the delay that had arisen towards the end of the year when, due to the effect of the drought, the liquidation of the animals was brought forward, moderating the escalation of prices. But even with this recomposition of prices, there is still a long way to go: 8.5% according to the LCG consultancy price survey.
However, according to the latest official statistics, there is some movement underway to narrow the gap between regulated and seasonal price increases. Because, in February it showed a marked acceleration in core inflation (the one that does not take into account seasonal prices) compared to last month.
In February, core inflation recorded a monthly change of 7.7%, which implies an inter-year change of 100.4%. For this reason, the consultancy firm ACM highlighted, in its latest report, that “the gap with headline inflation on an annual basis was 2.1 percentage points, narrowing the spread between the two unlike what happened in the previous months. (Although the general level since August has started to exceed core inflation in annual terms) she clarified.
Services, for their part, showed a monthly variation of 5.7% nationwide, implying a year-on-year variation of 98.7% per annum. % annually, reversing the trend seen since October 2022, where services have grown at a faster pace than goods. services still lag behind goods,” he said.
Source: Clarin
