:quality(85)//cloudfront-us-east-1.images.arcpublishing.com/infobae/CNTKELEBNKHH2IHZQTXGHEF44M.jpg "What will happen to prices: the factors that will make it difficult to lower inertia in the coming months, according to the market 1")
Reducing inflation becomes a more than complex task for the government. The 6% rise in prices in January and the forecast that this figure could be repeated in February has again caused concern for the economics team, after the “joy” of November and December, with slightly lower figures .
Inflation: they estimate that meat and prices already add at least another 2 points to the February index
January’s inflationary rebound has consolidated this month, according to private estimates that project the current CPI slightly above January’s
March also does not seem to show any change in trend, so the first quarter would close, according to all private forecasts, at almost 20%. Even so, in the Palacio de Hacienda, they maintain the target of 60% per year and the intention that joint ventures close around these values. But many factors make it possible to anticipate a price evolution several notches above these official estimates. What are? What do analysts expect for this election year?
At Palacio de Hacienda, they support the goal of 60% per year and the intention to close joint ventures around these values.
“Going forward, various factors will continue to put pressure on an inflationary inertia that is difficult to disarm in the short term. Among them, the impact of the drought on the price of certain foods; the transfer to the consumer of the cattle price adjustment; the dynamics of salary adjustments in an election year”, underlined the economist of Ecolatina, santiago manoukian.
Reimbursements for purchases in butcher shops: the government has regulated the procedure for accessing the allowance
The measure, published in the Official Journal, establishes the reimbursement of 10% of the amount, which cannot exceed the sum of $2,000 per service and per calendar month.
And to add: “To this are added the pending increases in the prices of public services; A creeping ankle exchange rate more in line with inflation; restrictions on imports and tensions on the gap and expectations of a devaluation in the midst of an electoral transition”. In this context, their estimates for the first quarter are around 20% and 95% for the whole year.
For Ecolatina, the set of price agreements instrumented by the government with different sectors producing goods and services under the aegis of fair prices – renewed and extended until June inclusive -, as well as the absence of shocks like those that occurred last year (war in Ukraine, resignation of Martin Guzman) could help “to dampen inertia and inflation expectations, but not significantly”.
Without seasonality: what the report says that contradicts the government’s argument on the rise in inflation in January
This is a new index measured by Di Tella University that replicates the methodology of the United States Bureau of Labor Statistics (BLS).
On the other hand, it is not clear that the government can maintain these agreements, in a scenario of shortage of foreign exchange and difficulties in freeing up dollars for companies to import.
“Similarly, the government will continue to face the difficulty of controlling the prices of fresh foods impacted by bad weather and/or seasonality – such as the case of vegetables and fruits – while the recomposition of beef prices continues. will continue,” Manoukian noted. The impact of the increase in hacienda, and therefore meat, from this month will be significant. In the February CPI, it could add a point of inflation, according to a calculation made by the consulting firm Equilibra. Therefore, a product that in the second half of last year played in favor due to the increase in supply due to the drought, is once again having a negative impact.
“The rise in meat is going to have a full impact on February’s CPI; thus, a figure that we estimated close to 5% will now be between 5.5% and 6%. And the problem is that March comes next, which is probably the same or higher than January, so we would end a first quarter with inflation averaging 6% per month,” he said. Lorenzo Sigaut Gravinaof Libra.
“In the future, various factors will continue to put pressure on an inflationary inertia that is difficult to disarm in the short term” (Manoukian)
Apart from the “meat” factor, the acceleration of the devaluation of the official exchange rate will also work against a possible inflationary slowdown; foreign currency shortages, a possible soybean dollar 3 and import restrictions; the start of the school year in March and the change of season with regard to clothing and footwear; and the remaining vestiges of rate increases, with their direct and indirect impacts. He also mentioned the risk of bird flu affecting chicken and egg production.
“Inflation never went down. It peaked at over 7%, but once the peak was behind it hovered around 5/6% every month. But inflation that high is very volatile. In January, many regulated increases have been impacted that were already announced and that the government has postponed, but like that, a lot of things,” he said. Gabriel Camano, from the Ecoledesma. For example, he said, “when the new soybean dollar comes, when they give them a higher exchange rate, it will generate an inflationary impact all the way down the chain.”
“Inflation is going to stay high all year,” he said. And he also recalled that although the Central Bank has slowed the rate of depreciation of the official dollar, it is still above 5% per month, and there is still monetary expansion. According to him, there is no reason for inflation to fall to 3% per month, as projected by the economic team.
“In January, many regulated increases that were already announced and that the government postponed” (Caamaño) impacted
In turn, the economist FIEL, Juan Luis Bour, listed the factors that he believes will make it impossible to achieve the official goal. First, he recalled that there is an excess of pesos, not only because of the fiscal and monetary expansion of the pandemic, but also because the deficit continues to be financed by emissions in a context where the demand for pesos drops. “Therefore, as long as they don’t reduce the deficit and reduce emissions, there is no room for a persistent slowdown,” he said.
On the other hand, “many variables are still hanging in the balance and being adjusted above inflation, now or later. Therefore, discrete jumps in the exchange rate, tariffs and other prices are expected which induce other relevant prices to move, such as wages)”. “Cutting the inertia requires measures that escape the radar of the current administration. They won’t raise rates, but they will have to when they implement single dollar 3, which will increase spreads,” Bour said.
According to him, when expectations are not corrected, inertia increases. And today, he said, there is no nominal anchor except for the expectation of a change of government, although its eventual decisions or timing are unclear. .
To reach the official target of 60% within the year, between February and December, the average monthly variation would have to be 3.8%, according to calculations by Ecolatina.
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