After April’s inflation jump to 8.4%, May risks becoming another difficult month in terms of prices. Despite the rate hike defined on Monday, private estimates already place the next consumer price index one notch higher – close to 9% -, due to the “drag” effect of the currency race and the increase in rates, among other causes.
If predictions come true, The rate will thus approach double digits, a figure that has not been recorded since April 2022, when it reached 10% per month. And it will be the fifth consecutive month of acceleration on a scale that started with 4.9% in November and which, for now, is exceeding consultants’ expectations.
Ecolatin predicts a number “closer to 9% than 8%” due to the adjustment of regulated goods and services, such as electricity and gas bills, public transport in AMBA (buses and trains +7.8%, subways +16%) and taxis (+20%). Also fuel (4%), tolls (between 40 and 50%), prepaid cards (3.6% on average), domestic services (7%), condominium administrators (6%) and schools.
“The inflationary process has acquired its own dynamic that is difficult to arrest, in the face of once again unmoored expectationsthe lack of credibility of economic policy makers to coordinate expectations and the absence of a stabilization programme, which helps to consolidate ever higher troughs for inflation,” he said.
Food will also have a significant impact, after posting a 10.1% increase in April. In the second of May, EcoGo revealed a weekly change of 1.3% and forecasts 1.8% for the next two weeks. With these data, food and general inflation would rise to 8.8% per month, 0.5 percentage points higher than expected last week.
In May, the resistance of the 20% jump in free dollars and their increase in May will weigh (blue closed higher this Tuesday, at $488, and the CCL, at $483). “You had the strong dollar rally in the last two weeks of April and that leaves a higher low for May, you’ll have those extra points and then the regulated one, the low is 8%,” estimated Matías De Luca, an economist at GCL.
Advisors see a sharp acceleration in inflation in the first week of May. “Are we looking at a new permanent price rate increase? Have we already gone from 5% to 6.5%… are we now pegged at 8% per month? They may seem like small moves, but in annualized terms these jumps mean going from a rate from 80% to 113% and then to 150%,” Invecq warned.
Added to this are the acceleration of the daily rate of devaluation of the official dollar (it exceeded 8% monthly to slow down again to the current 6% – 7%), new import restrictions and higher devaluation expectations, in addition to the impact of the “farm dollar” on some foods, despite the “Fair Prices” program.
For some analysts, the acceleration from 4% to almost 9% in six months goes beyond the monetary and fiscal imbalance, in a context of drought and growing tightening on imports. “This month can give up to 9%. Lack of anchors and indexing solidifies a low of 8% for the remainder of the year, so we’ve adjusted our projection for 2023 from 135% to 150%,” Econviews said.
Source: Clarin
