The agreement between the Government, unions and business entities to expect a new round of joint ventures in response to rising inflation may backfire. For economists, in this context of negative expectations, putting more pesos on the street could combine monthly inflation a notch higher.

For Camilo Tiscornia, director of consultancy at C&T, progress from parity is “dangerous.” “The more feedback there is between wages, the exchange rate and inflation, the more complicated the picture becomes. It is already in danger of rising inflationno doubt”.

According to this reading, the down payment of paritarias could reaffirm expectations that inflation is unbridled. “These expectations can affect prices. But you have to understand that the expectations are not coming from where: these are based on the fact that a strong spending dynamics are being seen, where the Central Bank raises rates and will end up issuing more to pay the leliq ”.

From consulting firm Anker, economist Martín Vauthier pointed out that the promotion of wage increases “ends up filtering expectations through the replacement value of firms.”

This could cause the price shock that occurred in February and March due to the double impact of the drought in Argentina and the Russian invasion of Ukraine. transition from temporary to permanent. “Going forward, if wages seek to keep pace with inflation in recent months and include this price shock, that part that may be short -lived, will be put into an inertia that is very high.”

Vauthier marks that “the risk is there will be a new inflation floor higher than in December and January ”, when the Consumer Price Index (CPI) was less than 4%.

To avoid this rebound effect on prices “it is important to coordinate expectations so that prices and wages try to rely rather than seek to recover what was lost in past inflation ”.

For this it is necessary that “the government aims to quickly implement an economic program that provides predictability and manages to reverse expectations, which is what the Monetary Fund agreement has not achieved,” Vauthier concludes.

Loss of purchasing power

According to the Fundación Libertad y Progreso, Inflation in March was 5.6% monthlywhich takes price increases in the first quarter to nearly 15%, the highest since 2002. “Requests to reopen joint ventures are the logical result of an inflation that is accelerating and a policy of inflation. economy that does not build credibility, ”said Eugenio Marí, the Foundation’s chief economist.

Under this scenario, “what we see is not an inflation driven by parity, but wages trying to accompany rising prices ”.

“We don’t expect inflation to slow significantly in the coming months, but this is not because of equities, but rather on signals coming from economic policy. The government itself has repeatedly ad nauseam that it will not make deep reforms, and doubts are growing whether it will meet the fiscal objective agreed by the IMF, ”Marí said.

The most troubling thing remains that, in the midst of this process, the purchasing power of wages continues to decline. “Over the past 5 years, the purchasing power of the average wage has dropped by almost 20%.and almost one in every three workers is below the poverty line, ”Marí said.

EcoGo consultancy already has a record 6.3% inflation for March. Its director, Sebastián Menescaldi, clarified the impact on prices of the measure agreed between the government, unions and companies.

“It can cause some acceleration if the promotion of parity is associated with services. In the case of goods Entrepreneurs have an important cushion of profitability and to keep demand, I think they intend to move rising costs more gradually, ”Menescaldi said.

Another who added nuance was Emmanuel Alvarez Agis, head of consulting firm PxQ, who asked to pay a fixed amount to compensate for inflation, rather than reopen parity.

AQ