Economy Minister Martín Guzmán expects in C5N that March inflation will exceed 6%. The data will be available at 4:00 pm when Indec publishes the consumer price index result.

For the Government, this will not be another reality for two reasons. Isa economy and other politico. First it’s about the highest inflation rate of its management. Second, the acceleration of inflation coincides with a watershed inside the cabinet regarding the conduct of economic policy and what priorities should be set until the 2023 elections.

Regarding the first point, government results on inflation range from low to high. After the rate fall in the first year of management (36.1% in 2020), it rose to 50.9% in 2021 and now the market expects a rate close to 60% according to the latest survey of market expectations.

This acceleration has different explanations.

The fiscal deficit will range from 0 to 6.5% of GDP in 2020, amid the pandemic. The Central Bank used issuance to finance most of this increase. Although then he continued to expand the money. Between 2020 and 2021 the bank released a figure equivalent to 11 points of GDP.

The rise in red is not just to address the difficulties of the economic recession due to the pandemic and quarantine ordered by the Government. It also stemmed from the Executive’s own decision to increase economic distortions, for example, by not correcting tariffs and dollars: both variables at this time were not evolving in step with the remaining prices in the economy. Now they show delays in their levels.

More factors explain the rise in inflation. Now the Government will blame the world. Yesterday, the United States released inflation data for March, which registered an annual 8.2%, the highest rate in four decades. The increase was largely due to rising oil prices as a result of the war between Ukraine and Russia.

Finally the rotation is political. On the one hand now there will be a technical response to Indec data. The Central Bank will certainly announce an increase in the interest rate. And the Ministry of Economy, in its usual off-screen explanation of the result, will state the same thing Guzmán pointed out on Monday: that we are experiencing a particular international scenario of rising inflation and that it is being attacked by a macroeconomic policy. .

The ruling party’s political response to today’s data is not expected to be identical. It is no coincidence that Roberto Feletti, secretary of Commerce, and Axel Kicillof, governor of the province of Buenos Aires, appeared in public yesterday. Kicillof presented a plan for local markets and price baskets. Steps consistent with Feletti’s steps. Not with Guzman.

The minister knew that the noise of internal politics had changed the functioning of the chain of command of the economy. The market is not convinced that the IMF program can be applied, ergo, that subsidies will go down and the deficit also. “Political support is needed because the economy is not working in a vacuum,” the minister acknowledged on Monday. Now he will insist on this idea.

Conclusion: for now it remains to be seen whether inflation will approach 6% or 7%. The result is not the same: if the rate exceeds 6.5%, it is the highest since April 2002 (10.4%). At that time, prices were rising after the dollar went from $ 1 to $ 4. Now the exchange rate remains stable. A monthly rate of more than 6% would mean an annualized figure of more than 100%. For April, a lower rate is expected, in principle.