Inflation: after a month of February affected by the rise in meat prices, the economy is confident in the slowdown and the objective of 60% per year

This Tuesday will be announced the change in the price index for February, which is estimated at around 6%, similar to the rate for January, with an interannual rate that will exceed 100%. However, while private analysts readjust their expectations for 2023 upwards, the government still maintains its fiscal target of 60% for the full year.

In the offices of the economic team, they recognize that February, in their initial plan for a staggered decline in inflation, the second month of the year he is lost”since the economy will not register a deceleration of the predicted magnitude, at the rate of one percentage point of the monthly rate every 75 days.

February’s CPI will be very similar to January’s – for some consultants even higher – but the official reading is that the rise in meat in the second month of the year had a weight that disabled any possibility , at least, that the index is showing signs of slowing down.

At the Palacio de Hacienda, they have not yet given up on the objective of reducing inflation that they proposed in the 2023 budget and in agreement with the International Monetary Fund. The February rate will show an annual rate of 100% and the economy will have ten months, if this official premise is fulfilled, to reduce this rate of price change at least forty percentage points.

For the time being, those in charge of the Economy insist on the fact that the strong inertia of prices must be combated, among other measures, by agreements and controls, since they assure, on their side, that the “fundamentals” macroeconomics “is coherent” with a monthly inflation rate of 4%, an idea with which the deputy minister keeps ringing Gabriel Rubinstein.

For February, most consultants predict a rate of around 6%. For EcoGo, for example, it was 6.4%, with underlying inflation (which excludes seasonal or regulated tariffs) of 6.6%, and which marks more intensely the level of inertia of the months coming.

“The regulated prices were lower than the monthly average. During the month, there were increases in fuel, telephony and Internet, and prepaid among others, which determined a monthly increase of 5.2% in the category. Seasonal prices have risen by 6.6%, bringing cumulative inflation to 13.5%, “said an analysis by the firm he heads. Marina Dal Poggetto.

Regarding the official hypothesis of a relevant effect of the increases in meat on the February CPI, EcoGo analyzed that “the rear and front cuts are the ones that saw the largest increases during the month with increases of 22.0% and 18.9% respectively, implying a rise in beef prices of 19.4%.

The prospect of reaching a change in the monthly CPI starting at 3% appears, in this context, as a more probable objective for the last part of the year. Also, historically, March is usually a month with inflationary acceleration such as the start of classes or the change of dress season. Gas increases are also expected to impact the index for the third month of the year.

The brake left by February for the current month has been resolved by the consulting firm C&T Asesores Económicos. “February is usually a month of relatively low inflation, but it wasn’t like that this year. To a large extent, this anomalous behavior is due to the 9.2% increase in the category of food and beverages, the one with the highest weight. Generally speaking, there was an acceleration of all its main components, but the most notable aspect was the increase in 20% in meata process that had already begun in January and which was accentuated in February”, they underlined.

And they assured that, for this reason, “this dynamic results in a very significant statistical drag effect for March, which for food and beverages is 3.5% and for the total CPI it is close of 1.5%, which will improve the increases that usually occur in that month and those already announced in various regulated articles”.

The economist of this study center, Maria Castiglioni Cotterassured that there are macroeconomic elements allowing to hope for a stable or higher inflation at present for the coming months, more than the fundamentals which are slowing it down.

“None of the factors that help to reduce inflation are present today. The only one that addresses the causes is the reduction of the budget deficit and therefore the reduction of the amount of pesos that the economy needs to finance the Treasury. Ahead come not very positive data from collection both because of the drought and the economic activity which is quite slow,” said Castiglioni Cotter in dialogue with Millenium FM.

A report by Ecolatina said, “In this sense, the government’s decision to include these sectors under the umbrella of the program is understood.” Fair prices: a greater acceleration in prices in March would put more pressure on the government’s economic plan”.

“In March, the price increases for water and gas, trains and buses (6%), private schools (16.4%), fuel (3.8%), prepaid (7.7 % for those earning income) will have a specific impact net income equal to or greater than $392,562 and 5% for those earning less than that amount) and domestic service (4%),” they said. in a recent report.

Ecolatina believed that “in the future, different factors will continue to put pressure on a inflationary inertia difficult to disarm in the short term. Among them, the impact of drought on the price of certain fresh foods; margin for greater transfer to the consumer of cattle price adjustment; the dynamics of salary adjustments in an election year”.

And the consultant in question also continued, as central elements “ongoing increases in utility rates; a decline in currencies more in line with inflation; restrictions on imports and tensions on the gap and expectations of devaluation in the midst of an electoral transition. possible impact of drought on food prices, inertia in wage dynamics and import restrictions”.

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