Rates, prepayments and rentals will put pressure on inflation in June

With May inflation at around 5%, preliminary data for June already shows that this month has some increase in its sleeve that will put the index on a level similar to that of today.

Rising prepaid, gas and electricity bills, rent, wages of domestic workers and streaming subscriptions such as Netflix indicate that June inflation is also high.

In the case of prepaid, the government allowed an increase of 23.55% in three batches. The first increase of 8% was already applied in May and now follows a 10% for June. Then the 4% hike for July is pending.

This was added to the increases earned by prepaid in the first quarter of the year, and that accumulated an increase of 22.5%.

As for rates, the increases will affect consumption in June, although they will start to pay off in July. The increase already announced by the Government in the endorsement of the respective entity is 17% for electricity and from 18 to 25% for gas.

Another factor that will have an impact on inflation next month is domestic staff, with a 15% increase in wages. Workers in this sector have already seen increases in two stages of 6 and 9% in the early part of the year.

Also, rent increase by 54% for those who signed the contract in May 2021, according to the evolution of the location index published by the Central Bank.

As long as the current lease law is not changed the contracts are updated once a year in conjunction with the date of signing the contract through the index for lease contracts (ICL).

On the other hand, it will also be felt in the pockets of Netflix, which will raise the price of its subscriptions in Argentina. 27.6%. This means that in June the main payment will go to $ 429, the standard of $ 799 and the premium on $ 1199.

There is inflation

Private economists estimate that May inflation will be at 5%. Forecasts announced by Clarín range from 5.5% to 4.8%.

The highest advance was recorded by the consulting firm Ecolatina. “Although we haven’t closed the number yet, our estimate is 5.5% for May. In a calm exchange context and where there is no associated rate increase, this is more than significant increase. It seems almost a new floor for inflation ”, suggests economist Federico Moll.

For Fausto Spotorno, the figure for May will be 4.8%, while Fernando Marull estimates 5%, as does Camilo Tiscornia, from C&T consultancy.

Consulting firm EcoGo’s projection is that the Consumer Price Index (CPI) for this month will end at 5.2%.

From the LCG consultancy they marked that this month continues to have a huge impact of food. In the fourth week of the month, the LCG food and beverage index marked a weekly increase of 0.8%. The meat category itself explained two-thirds of weekly inflation. For four weeks in a row, food prices averaged 5.2% in May compared to the same week in April.

From Anker Federico Furiase’s estimate that May inflation could provide “something more than 5%. And for June it has reached rates, where vWe are having a hard time getting it back in the short term at a rate of 3.5 or 4%”.

For Tiscornia and Spotorno the price index for all of 2022 will be “more than 70%”. For Marul, “The base is 72%, although it could reach 76%.”

The record inflation of approximately 5% for May was less than 6% in April and 6.7% in March, the highest rate of the year so far.

On the list of increases expected for next month, Marull sees chances of inflation in June matched in May by 5%. While it will be encouraging news if it comes true, it is still far from ending the price increase.

According to Marull’s estimate, with a monthly record of 4.5% from June to December, inflation closes the year at 76%. And if CPI rises a notch and is structured at 5.5% per month, it could climb to 88% per year.