Luis Caputo says inflation is collapsing: is food decreasing?

Days ago the Minister of Economy Luis Caputo, said that March inflation will be close to 10%, which would mark the third consecutive decline in the index, which went from 25.5% in December to 20.6% in January and from there to 13.2% in February. From the Treasury Palace they celebrate that the slowdown in food is more marked than in the rest of the items, which opens up the possibility that the desired single-digit record will be achieved this month.

For Caputo, inflation”It’s really breaking down, the core is in the single digits. There are no longer macroeconomic reasons for inflation”.

In the measurement of the consultancy firm EcoGo, from March “the recession prevailed over seasonality” and while it’s usually a month with higher inflation than February, that didn’t happen this time. It therefore stands at 12.5, with an increase of 10.7% for Food and Beverages.

Even if inflation remains high, preliminary data for April seems to prove the government right. The food price survey conducted by the consultancy firm LCG showed weekly inflation of 0.4%, 0.4 percentage points less than the previous week. This percentage hides 4 days in March and 3 in April (only one working day), since the survey is carried out on Wednesday.

LCG specifies much of the deceleration it is due to the decline in Beverages (-3.7%), which subtracted 0.5 percentage points from weekly inflation. On a monthly basis “the average increase is 8.5%, maintaining the downward trend of the last three weeks”. Thus, the index surpassed the monthly threshold of 10% after 20 weeks (since November 3, 2023).

Another data that supports the slowdown in food is that of the first week of April 25% of products saw an increase, two points less than the average of the last four weeks (27%). However, even with this moderation, these adjustment percentages amount to assuming this assumption The basket total increases every 3.7 weeks.

For the Economic Studies Center of Bahía Blanca in the first week of April The food and beverage category recorded a change of 2%. Compared to the previous week, the products that increased the most were potatoes with 18.5%, water with 10.3% and rice with 10.1%. At the same time, there were declines of 5% in oranges, 6% in coffee and 6.9% in butter.

According to the Econviews price survey, which measures the basket of groceries, cleaning and perfumery in supermarkets, The month started with a weekly change of 0.8%. In the first week of March the increase was 2.2%.

Economist Fernando Marull, director of consultancy firm FMyA, has called it quits for March inflation of 12.1%with the food sector closer to 10%.

“April would be the last month of sharp rate increases, as gas increases of around 350% on average for residential properties were finally confirmed. This would contribute almost 2 points to overall inflation, which we expect to be 11% monthly. “In the particular case of the food sector, it will continue to be less than 10%.”

Decline in consumption

The brake on food is in tune with the collapse in consumption. According to CAME data for March, retail sales decreased by 12.6% annually compared to the same month last year, at constant prices, and accumulated a decline of 22.1% in the first quarter of the year. In the monthly comparison they decreased by 3.2%.

Food sales fell 15.5% annually in Marchat constant prices and accumulate a decline of 28.7% in the first three months of the year, compared to the same period of 2023. In the month-on-month comparison they decreased by 2.7%.

Federico Moll, director of Ecolatina, contributes that “mass consumption in supermarkets is probably decreasing and from now on the salary will probably start to beat supermarket inflation. Mass consumption was the first to change its relative price. “Now it’s up to the tariffs and by paying more you have less money available for other purchases.”

“We will see single-digit inflation quickly. In March we will have single-digit inflation in the core and wholesale markets. And it’s extremely likely that we will have single-digit inflation in April,” indicated the economist Fausto Spotorno.