Inflation 2022: 7 out of 10 products increased in August

A few hours later we know official data on inflation for August, which would be around 6.7%, the inflationary rally does not stop. Private polls show that 7 out of 10 mass consumer products have risen in the past four weeks.

Also, in the last fortnight of August almost 60% of prices showed increases of more than 7%what never happened in previous years, according to a report by Ecolatina.

“The share of prices that showed increases has averaged over 70% in the last four fortnight. Of the survey on the total prices of mass consumer products, seven out of ten showed an increasewhile the remaining three remained unchanged or with negative variations “.

Ecolatina marks that the IPC INDEC would accumulate an increase of 55.4% in the first eight months of the year, “magnitude not seen since the end of hyperinflation in the early 1990s”. Over the same period, last year’s record was 32.3%.

Advisor explains that inflation averaged 5.1% in the first quarter of this year, increased to 5.4% in the second and is expected to rise. in the third quarter to the area of ​​6.5%.

Why is inflation accelerating? In the list of factors that push prices higher and higher. This includes fuel and fare increases, plus higher than expected seasonal increases (such as fruit and vegetables and clothing).

To this we must add “greater price sensitivity to parallel dollar changes and an increasing monetary financing of the fiscal deficit has generated an unanchoring of expectations ”.

Another factor that adds fuel to the fire is the inertia shown by core inflation, the record that cleans the index from the effect of seasonal and regulated prices. 2.1 percentage points above the average of the last 12 monthsaccording to the CPI GBA Ecolatina.

In this sense, «the parallel rise in the dollar weakened the official reference exchange rate, giving rise to a context of strong uncertainty and transfer to prices“, says Ecolatina.

Stronger observations

“Today the comments are more frequent and pronounced. When the inflationary process begins to accelerate and expectations break free, it becomes necessary to adjust prices more frequently, because nominal references become more widespread and alter the information content of the price system ”.

What economists are pointing out is that today the inflationary acceleration no longer responds mainly to exchange jumps in the official exchange rate or tariffs or to the freezing of price adjustments, as occurred in the period 2018-2021.

Instead, “the rise of parallel dollars and the widening and tightening of import restrictions it implied a strong transmission mechanism towards prices. Inflationary dynamics have become more fragile in the face of potential shocks “.

The inertia adopted by inflation in August was maintained in September, the month for which private economists estimate a floor of 6% for the price index.

From the LCG consultancy they note that “in the first week of September there was an increase in the percentage of products with an increase, as this went from 21% to 25%”, Highlighted the consultant’s latest report.

And he thought about it: “There are already 10 weeks with a value above 20%. This means that all the products in the cart would experience a price increase in just over a month”, He concluded.

How to stop the inflationary spiral? From Ecolatina they argue that it is fundamental “coordinate downward expectations so as not to continue to fuel inflationary dynamics. But the automatic updating of some relative prices (such as prepaid, for example) aggravates the risk of moving to an inflationary regime with higher indexation than the current one and, therefore, more difficult to disarm ”.

AQ