Inflation is even worse than the INDEC numbers say

It was extraordinary how hard Sergio Massa, Alberto Fernández and even Axel Kicillof worked on Wednesday to find a political advantage in signing the contracts for the construction of the Loma de la Lata pipeline, even if, with a lot of wind in their favor, the pipeline will only be operational within a year.

It happens that in the meantime the real reality sings it energy imports consume the few dollars left by the central bankprovides for the removal of subsidies with increased tax rates included, shows an inflationary escalation that will be difficult to dismantle and continues killing story.

“Let’s let the reserves go a little to guarantee energy to the Argentines,” said the Minister of Economy. A bit?

INDEC statistics say that imports of natural gas, liquefied gas and diesel fuel they already amounted to US $ 6,609 million in the first half of the year. And the forecasts of the specialists extend the account for the whole of 2022 to 13,500 million dollars, a historical record which would exceed the 2021 threshold of $ 7.6 billion or 130%.

After all, there remains the possibility of explaining the phenomenon through the strong impact that the Russian invasion of Ukraine had on energy prices, only that argument not even remotely explains such a hole. According to INDEC, the weight of each factor in the result was: 84% prices against 57% of quantities.

There is no way to hide the reality, yet: Argentina buys a lot abroad because it does not have much or is missing inside, the same or similar to what happens with the list of incomplete sections that are there, crystallized, in the production of Chains . Everything, dependence on the outside.

“We are close to reaching what has been taken from us and private. We are close to national energy sovereignty ”, Kicillof strut in the same act indicating macrism.

Yet lots of foam, lots of screams and few detailsaccording to the INDEC numbers.

The balance between energy exports and imports has been a surplus for Argentina for years, until 2010, when he turned and entered permanent red zone. Like the very strong 3.1 billion dollars of 2021; 7.8 billion dollars in 2013 or 5.2 billion dollars in 2014. Here, in a short time, the 2.65 billion dollars in the first half of 2022.

In 2010 Cristina Kirchner was already president and Kicillof, her chief advisor, was advancing at the head of the Ministry of Economy with an aspiration crowned in 2013. Then, the current governor cannot ignore that by now the country had already lost self-energy. sufficiency, by far and by the work and grace of a management that had him in the role of central protagonist.

What things are you talking about then when you talk about what they took away from us? Y what is the energy sovereignty that we are close to recovering? Sometimes, it’s best not to go around fumbling to decipher any construction.

From the beginning, Néstor Kirchner has focused on managing the energy sector, which, coming from an oil province, he knew in many of its most interesting formats, including potential wealth and some pros and cons of business.

A direct relative of that goal was the management model populated by officials from La Cámpora that Cristina put together. Where some keys pass control the electricity market and regulatory bodies and to the company that imports the always expensive liquefied gas, which is also responsible for the Loma de la Lata pipeline.

Without spending much imagination and perhaps pushed by Kicillof, a classic of Kirchnerism was born from that conglomerate: the freezing of electricity and gas tariffs. Continuously, an impressive delay in prices followed.

Again, the INDEC data. They reveal that in the two long years in which this government has been in office, inflation accumulates around 200% against 53% which, in the same period, has raised rates in the metropolitan area of ​​the Capital and the Conurbano. The tariff gap and the delay they mean 143 percentage points and a distortion as large as it is unsustainable and difficult to reduce.

Applied without too much effort, accompanying the mess is also the expenditure on energy subsidies which run at 95% nominal compared to 2021 or 22.8% discounted for inflation and which, between January and July, added 922,000 million. dollars.

Following a DNU in mid-June, the full-year authorized item grew to 1.6 billion pesos and thus frees up a remainder close to $ 700,000 million for August-December. The final figure for 2021 was one billion pesos.

Against the backdrop of the fiscal adjustment, one question now stands alone: ​​will it follow the speakerphone policy in the space that Cristina Kirchner personally manages or will there be conflicting interference? For now, the new Undersecretary of Energy, Flavia Royón, tariff segmentation continues to lag behind with elimination of subsidies.

Something similar, although from a different seed, occurs with the public transport of passengers. After increases of 84% since January 2020, the sector accumulates a tariff delay of 116 percentage points; Between January and July, it records subsidies of $ 190,000 million, with an annual fee of $ 374,000 million and a nominal increase of 93.8% compared to 2021.

Also getting on the good vibes train, presidential spokesperson Gabriela Cerruti spoke Thursday of “a feeling of stability in many issues” while acknowledging that the July price index was not what we expected “nor what we think we should to have” .

Obviously the July index was what it was: 7.4%, the highest in 20 years. No sense of stability but a new leap towards 90% or 100% per yearthat is, towards a record that exceeds 50.9% in 2021 by about 40 points and 36.1% in 2020 by 50 points, when the current version of Kirchnerism began.

There is nothing new in saying this the higher the inflation, the more difficult it will be to lower it and that the same thing happens when you run at the speed you are running: that it will take time and effort to start slowing it down.

The question is aggravated if, beyond that, there is a price structure full of distortions; among these, goods which in the last twelve months have increased by 106%, such as clothing, and services which rise to 39.4 or 41%, such as electricity and gas costs and public passenger transport.

Just a few more examples for this newsletter. In the upper steps we also have 96% prepaid; 88% sugar; 76% in bread and cereals and 73% in vegetables. In the mid-range we find Internet and telephony, with 33%; fuels in 48% and 42% of tobacco.

It is clear, at first glance, that the painting gets worse from month to month and that shooting it will involve, at this rate, implement an ever more ingenious, solid and articulated anti-inflation plan. Starting with a system that deidicizes the economy.

Press release from the Central Bank: “The normalization of the monetary policy rate continues”. And what does BCRA call normalization? On the rise in the rate that acts as a guideline for the market and aims to contain the Azzurri: now from 60 to 69.5% per annum or 96.8% of the effective annual rate.

Therefore, to bring it closer to inflation, he scored an 18 percentage point serve in less than a month, from 52% at the end of July. Obvious: true normality continues to fade.