It’s not just companies: State-regulated prices are also driving inflation

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Food, clothing, hotel-restaurants and education were the items that had the biggest impact on the 7.7% increase in inflation in March. And a fact that is on the rise: the regulated prices by the state, such as rates public services, fuel or prepaidincreased by 8.3% (in Capital and GBA 9.1%), according to INDEC data.

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Since March is a month of high inflation due to seasonal factors, if we consider a longer period, in the first three months of this year, in the capital and Greater Buenos Aires, with an average inflation of 21.9%, food increased by 30%, stand out fruit which rose by 50%, meat by 39.8% and vegetables by 31.4%. These percentages, more or less, are repeated in the rest of the regions of the country.

Due to the higher incidence of food and metropolitan region in the overall index, food inflation dominates price record.

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In January, in the Capital and GBA, food prices increased by 6.4%, and in both February and March they increased by more than 10%.

These data anticipate it the value of the food or poverty basket in March, which we will know in the next few days, it could be around 115% year over year against an average inflation of 104.3%, demonstrating this current inflation hits the fixed-income and low-income sectors hardest.

Consequently, compounded by the gap between average and food inflation, these percentages they rethink parity negotiations. And although the government has given bonuses to the most vulnerable sectors, these income increases are neutralized by the rate of increase of food prices, which foresees a new increase in the measures of indigence and poverty.

In April, food prices continue to rise – affecting the lower supply due to the drought – to which is added the domestic price impact of the dollar of $300 for regional economies.

That higher dollar – which represents a partial devaluation of the peso and is passed on to domestic prices – includes meat, fish, dairy, fruit, vegetables, coffee, tea, grass, grains, flour, oil, shortening, sugar, cocoa, food preparations , drinks, tobacco, essential oils, perfumery, cork, wood, silk, wool and cotton, all products of large internal consumption.

“Without considering the indirect effects deriving from the incidence of inputs along the entire production chain and considering only the final products included in the regional economies of the dollar, 40% of the products that make up the CPI would be reached directly”, says the economist Emanuel Alvarez Agis.

To all this is added that Fair prices have almost no impact on the INDEC measurementnor in family spending.

“The prices surveyed that are part of the agreement programs between the state and the business sector for the month of March represent 2.95% of total prices surveyed in the GBA (Capital and Conurbano)”, explains INDEC.

Therefore, fair prices have a minimal incidence in the family budget, with the aggravating circumstance that They do not reach nearby businesseswhere mainly low-income and more vulnerable families shop and in large supermarkets the offer of these products is scarce, irregular or insufficient.

Finally, another factor driving up inflation is the state-regulated prices, which since then began to rise above average.

In January they increased by 7.1% against an average inflation of 6%. In February they were lower (5.1% against 6.6%). While in March regulated prices rose by 8.3% (in Capital and GBA 9.1%) while average inflation was 7.7%. AND should follow this new trend after the commitments with the IMF phase out subsidies more expeditiously plus monthly increases in fuel and advances.

In addition, it is assumed that as a result of the agreement with the IMF, the Central Bank would raise the interest rate with its inflationary impact.

“In April there will be specific increases in buses (+6.6%), fuel (+3.6%), telephony (+7.8%), education (+3.4%) and electricity (+34% average), which leave, within themselves, 1.5 points of monthly inflation”, points out the consultancy firm LCG.

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Source: Clarin

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