After several years of “trampled” prices, the liberation of the regulated prices of the economy proposed by the new management of Javier Milei is reconfigure the relative price structure of goods and services.
That is, the dismantling of “repressed” inflation, especially in the case of public service tariffs, but also of fuel, prepaid cards and more, is bridging the gap with the increases which, in recent years, have affected other goods such as food or clothing and footwear.
One way to see the evolution of the trend is to compare the behavior of regulated prices with those that make up “core” inflation, i.e. the one that It does not take into account seasonal variations.
Taking into account the period between November 2023 and February this year, according to the latest data available from INDEC, it can be seen that core inflation amounts to 73.1% of increase, while regulated prices (electricity, gas, communications, transportation, prepaid medicine, fuel and others) did 85%.
If we make the comparison over a year, to exclude seasonal effects and see the period in which subsidies were still strong, the effect is the opposite: “core” inflation, with an increase of 292%, remained above of the prices “trodden” with the rules maintained by the previous management, which grew by 260.6%.
Claudio Caprarulo, economist at Analytica, explains: “before, during the government of Alberto Fernández, core inflation moved at a certain pace and core inflation fell below. This created a very large gap, which then narrowed under the new management of Javier Milei.
Leading the list of items that have recorded the greatest increases in the last four months Basic goods and services Transportation, healthcare, communications, household equipment and maintenance.
On the other hand, during the government of Alberto Fernandez, the same classification was made up of clothing and footwear, restaurants and hotels; Food and non-alcoholic drinks (which increased by 303% in the last year alone) and Recreation and Culture.
According to Caprarulo, this shows that “we are moving to another relative pricing scheme. What we are starting to see is that the Government wants to move towards a different configuration, seeking, among other things, Make up for the loss that some regulated or frozen prices had during the previous administration. A very clear example in this sense is the systematic and gradual increases in fuel prices that occurred starting from December 10th. And which, according to the oil companies, still has a part to “recompose”.
Eco Go economist Rocio Bisang reinforces the concept: “when we talk about the recomposition of relative prices, we are talking about all prices once again have the same relationship they had with each otherin the period we take as a basis,” he explains.
“Rates over the past year have risen less than food rates, so the ratio between the two has changed relative to 2023. When we talk about correction or recomposition, we mean that rates should now rise above food, so that it returns to have that relationship they had at the beginning,” he explained.
So according to Caprarulo ““The problem is not yet solved and is very complex.”, he warns. Because we come from a very important gap. “If you evaluate the period between December 2019 and February 2024, you see that regulated prices increased by 1,092% and seasonal prices increased by 1,092%. almost double: 1.935%”, exemplifies the analyst.
That is, the gap between regulated and seasonal prices or the correction of relative prices, It will take your time.
Source: Clarin
