Full-year inflation forecast already points to 140%

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More and more advisors are lengthening their annual inflation projection. EcoGo, Equilibra, FIEL and C&T are some of those who have raised their estimates based on the increases of the last few weeks. This would end the election year and Alberto’s management a consumer price index (CPI) that could exceed 140%.

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Last week, the Survey of Market Expectations (REM) projected 126.4% inflation for all of 2023. The projection is already sounding old, with an index for April due out this Friday and will be higher than 7.5%according to private estimates.

While the REM has managed inflation from behind, it certainly reflects the acceleration in prices. in January They forecast a 97.6% annual increase, and three months later it jumped to 126.4%.

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The jump in alternative dollars in the last week of April and the acceleration in food prices in early May are causing private economists to redefine their projections.

María Castiglioni, economist at the consultancy firm C&T, forecast 140% until December. “Today it already runs close to that level and the situation will continue like this,” he anticipates. A similar level is managed by the consultancy firm Equilibra.

“We have a forecast of accelerating inflation in November and December, which I’d take it to 135% or 140%”underlines Juan Luis Bour, FIEL economist

From EcoGo they expect inflation of 7.3% for April and 8% for May. “After that, it will depend a lot on getting dollars: from the working soybean dollar and gathering some net reserves,” says Sebastián Menescaldi.

“There is a minimum of 150% inflation for the year. We do not exclude that there will be another episode of exchange rate gap jumping that will bring inflation into double digits for a month,” Menescaldi adds.

Some measurements are still one step below. Among these, those of Ecolatina, which provides a rate of 130%.

For the economist Santiago Manoukian, “the inflationary acceleration at the beginning of 2023 damaged the credibility of the economic teamhas once again disengaged expectations and put pressure on a creeping peg (the daily rise of the official dollar) which must be accelerated to avoid a greater lag in the exchange rate, fueling the dynamics”.

“Inflation fueled by strong inertia, increasing indexation and shortening of contract terms, together with the uncertainty of the electoral transition and the lack of anchors: not only that of an official dollar that is gaining speed, but of new increases in the tariffs of public services and parity”, argues the economist Ecolatina.

“Add to this the impact of import restrictions, prices more sensitive to gap movements, devaluation expectations exerting pressure and the impact of the ‘farm dollar’ on some foods, with a ‘Fair Prices’ program hardly influential”. concludes Manoukian.

For now, Fausto Spotorno predicts 128% inflation, in line with REM forecasts.

For Fernando Marull, “with inflation of 7.5% or 7.6% in April and May and without a leap in exchange rates, the index would reach 120% in 2023. But if there were a leap in exchange rates it would go to 140%“.

For Juan Pablo Albornoz, economist at Invecq Consulting, “the market average predicts even higher inflation”. and details three factors which could lead to annual inflation above the 120% the advisor claims today.

On the one hand it is stated that it is not resolved the debt front in pesos. “We hope to have a favorable outcome, although we may have stress in the electoral race. It’s not even resolvedor the exchange front and this generates uncertainty and puts pressure on prices. On the other hand the impact of drought on food It is showing, but we haven’t yet been able to see what will happen with the next campaign.”

“The risks are clearly to the upside. What could restore calm is that there is an orderly political transition and that they get additional funding and that the Treasury can continue to build up the debt in pesos and that we have no stress. Personally, I don’t see the latter as probable,” explains Albornoz.


Source: Clarin

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