Inflation in 2023 was the highest since 1990. The year ended with an increase in the price index of between 210 and 220%. December, with the change of government and the jump in devaluation in between, dealt the final blow to this record a jump that is around 29%, according to consultants’ estimates.
On January 11, INDEC will release the Consumer Price Index (CPI) for December. With an annual registration exceeding 200%, Argentina enters a triple-digit annual inflation cycle which the country has not seen since the hyperinflation of 1990. For this year, economists also expect high inflation, which could even be higher than that of 2023. Preliminary data indicates that The December to February quarter would have a minimum threshold of 100%.
Eco Go, the consultancy firm directed by Marina Dal Poggetto, estimates last month’s inflation at 29.4%, with an annual jump of 222.8%. The key to December’s increase was the increase in food products 35.3%. In the measurement of this consultancy, the increase in this item continued to grow over the course of the month: it started with 8.2%, continued with 10.4% and had a peak of 11.3% in third week of the month. In the latest one, the previous ones will have started to regress, with a leap of 5%.
The devaluation that led to the official dollar $365 to $800 A late price increase was triggered in mid-December and this was also compounded by the removal from the freezer of products that arrived frozen or with limited monthly increases, such as fuel.
With 258.9%, food is the item that grew the most during the year according to the Eco Go survey. At the other extreme, the one that grew the least was Transport and Communications, with 165.7%. Among foods, the one that increased the most was meat, with an increase of 395.5% in 2023.
Within the negative picture, the relief is that prices started to slow in the last week of the month. Over the same period, consultancy firm LCG’s Food and Beverage survey increased 7.1%, slowing 4.4 percentage points from the previous week.
“However, average monthly inflation continued to accelerate, reaching 27.1%. The cumulative figure for the last 4 weeks has risen to 36.1%, leaving a significant burden for the coming weeks,” they say.
With this inertia, LCG projects inflation for December 28%, consistent with an increase 218% per year.
December’s inflationary surge was so brutal that the entire price basket analyzed by LCG almost suffered two increases per month.
Another measure consistent with this data is the Freedom and Progress CPI, which shows an increase 29% per month e 219% for the year, the highest since 1990.
Eugenio Marí, chief economist of the Libertad y Progreso Foundation, underlined that “the increase in the CPI in December is explained by the artificially delayed price release. Something that had served to show a lower CPI in previous months, but which was unsustainable. “Now we see that regulated prices are recovering lost ground and rising more than others.”
And he added “given the speed of price normalization, January’s CPI is likely to be lower than December’sand the same for February. Even in the last week we have seen a downward adjustment of prices, such as that of meat, as they had increased more than the equilibrium level. At the same time, the elimination of discretionary barriers to imports will help increase the supply of products on the domestic market and moderate the increase in marketable prices”.
Despite the slowdown in recent weeks, December’s price increases leave significant inertia for January. Other increases already announced will contribute to this, such as the 45% increase in bus fare in the AMBA, the increase in tolls and subways and the increase of around 40% by prepaid companies.
This is why preliminary projections from consultancy firms anticipate the first month of 2024 inflation similar to that of December.
Source: Clarin
