The Minister of Economy, Luis Caputo, has appeared optimistic in recent days due to the slowdown in inflation. After the record of 25.5% in December, a change of 20% is expected in January and a lower value in February due to the decline in demand due to the ongoing strong recession and fiscal adjustment. However, Economists don’t believe the decline will be that rapid or linear.
Private consulting firms predict this Inflation will remain high and could reach as high as 22% in March due to the continuous increase in tariffs, increases in regulated prices – such as petrol and prepaid – and the possibility of a new adjustment of the exchange rate given the appreciation of the official dollar, one of the government’s anchors to contain prices.
Although the weekly LCG food index reflected a volatile convergence towards 1% rates towards the end of January, in the first week of February saw a rebound to 3.4%. Econviews reported an acceleration of 3.8% over the same period in GBA supermarkets for food basket, perfumery and cleaning, the same level estimated by EcoGo.
This month will weigh 250% increase in transport in AMBA agreed last week, which adds 10 points to inflation; new increases in petrol due to the update of the fuel tax and the possible increase in electricity and gas tariffs, with a progressive impact over the next four months, as the removal of subsidies for most users would be completed in April.
“We expect inflation to be around 22% in February and a similar percentage in March whether the postponed regulated increases are realized,” said Florencia Iragui, an economist at LCG. “In this context, we do not see such a favorable disinflation path as the one envisaged by the minister when he expects single-digit records for April,” estimated the consultancy firm in a relationship.
– Caputo underlined last week in an interview with LN+ that the level of inflation “remains very high, but lower than expected” and assured that “this is the sign that the fiscal anchor is working”. He also ruled out a new devaluation, but several consultancies believe that high inflation will likely require a new correction in the official exchange rate, currently at 2% monthly.
For Equilibra, the difficulties that Javier Milei’s management will face will be these”The economy will go through a sharp recession with high inflation and that this dynamic will give rise to many sources of social and political conflict.” Thus, although the CPI slowed in January due to the food and soft drinks category, regulated prices increased by 28.5% on average of the month.
“This price segment will continue to drive inflation in February and March, when the significant increases in the transport, gas, electricity, petrol and telephone sectors, among others. Energy growth could exceed 100% in February and transportation growth could approach 70%. Prepaid companies have announced another 30% increase for February and so will petrol prices,” the consultant explained.
Then, for March, a month in which inflation is seasonally highest, Equilibra estimates that energy and transportation reorganizations will continue and that adjustments will come in the education sector, to which matching payments will have to be added. Given this panorama, the consultancy company hopes so The February-March two-month period will have an average monthly inflation of around 20%..
According to the Central Bank’s Market Expectations Survey, inflation will slow to 21.9% in January, 18% in February, 15.3% in March and 13% in April. Along the same lines, Analytica forecasts 18.6% in February and 14.8% in March, due to the lower transfer on prices of the mega devaluation decided last December.
EcoGo expects inflation of 14.1% in February, but with a rebound in March to between 16 and 18%. “The core is low and the regulators, which are the ones driving, are slow. Transport applied the increase a few days ago and the electricity increases (which have less weight than gas) only affect the highest income users (30% residential)”, explained Lucio Garay Méndez, of the consultancy firm.
Source: Clarin
