The recession is behind the unprecedented behavior of inflation in March

Although March is a seasonally high month in terms of inflation, this year the forecasts of private consultancy firms speak of a behavior similar to that of February in the evolution of the retail price index and even lower: an increase of between 10.5% and 13% is expected. While the Government is much more optimistic and assures that the figure has already been reached to a single digit.

To a large extent, the containment of inflation this month is due to slowdown in the pace of increase in food prices, an item that practically weighs 25% in the consumer price index (CPI). Added to this is the “recession” effect which affects almost all sectors.

Specifically regarding foodthe consultancy firm’s investigation LCG showed to average increase of 10.2% in the last 4 weeks and 8.6% from one total to the next in the same period.

Meanwhile, second Echo Goinflation in food consumed at home would amount to 11.4% in March, taking into account the measurement up to the third week of the month and considering an expected increase of 3% for the last week. The increases recorded in food consumed outside the home would reach 11.2%.​

Hence, consultancy projects a general level of increase for March equal to 13.1%, confirmed Rocio BisangEco Go economist and clarified that “the reduction in this number compared to the previous week responds, mainly, lower food inflation.”

For the Freedom and Progress FoundationMarch’s inflationary surge was 10.6%, slowing down by 2.6 percentage points compared to the official measurement in February (13.2%). In this way, in the first quarter of the year the CPI would accumulate an increase of 51.1% and the interannual variation is equal to 286.4%.

According to this analysis, the first week of March presented an increase of 5.2%. to the increase in regulated prices. “In particular, there have been increases in electricity tariffs and the update of tuition. In the second week it slowed to 1.6% and in the third a low of 0.8% was reached. the lowest measurement since October. Finally, in the last week of the month it accelerated to 1.4%,” the institution noted. And he added that, in this way, the March CPI leaves a drag of 1.8 percentage points for April, approximately 1.2 points less than in February.

According to the economist Lautaro Moschet, starting from this, “the good news is that, despite the seasonality that this month presents, the index has slowed down again. This ensures that inflation will continue to fall in the coming months. Strengthening this position, The third week of the month featured an increase of less than 1%, something we hadn’t seen since October last year. But this was not an isolated event, but comparing each of the weeks of March with the similar week of the previous month, the decrease continues to be evident”, he commented.

From the SUBJECT TO TENSIONthe Economist Hernan Lechter esteem an increase of 11.9% for the March price index. Far from being as optimistic as other market analysts, he explains it behind the data “there is a very large recession with a fixed exchange rate and a parallel downward dollar”. “So it’s no small thing,” she said.

This recession is framed by an initial sharp rise in the exchange rate last December and the subsequent rise in inflation in the following months. Furthermore, the removal of subsidies from tariffs and the honesty of many depressed prices have reduced wages by 20% and pensions by 30% from November to today, thus worsening the decline in economic activity.

For his part, the consultant ACM warned about the impact of seasonality on the inflation data that INDEC will report on April 12: “In March, the slowdown recorded (in February) is expected to lose momentum due to expected increases in regulated prices, especially in the Education, one of the most backward price segments that have not yet recorded significant increases, prepaid cards, tariffs and fuel to name a few.”

“Moreover, they still persist delays relationship between the different divisions that make up the consumer price index and general inflation, he noted in his latest report.