Sunday, May 19, 2024

The INDEC will confirm today a new drop in inflation, which still remains in double digits


  REUTERS/Tomas CuestaREUTERS/Tomas Cuesta

INDEC will confirm today a new drop in inflation, although the record will still remain in the double digits. The Minister of Economy himself, Luis Caputo, anticipated last week that the data that will be released will be around 10%, which would imply a drop of more than two points compared to the inflation of 13.2% in February. Given this expectation, and with its own indicators that confirmed the same trend, the Central Bank anticipated yesterday and within the framework of its deeply negative interest rate strategy, applied a new cut to leave it at 70% nominal annual rate, which is equivalent to a monthly rate of 5.8% nominal. The move confirms the forecasts of private analysts, who also predict a reduction of at least one point in the CPI compared to the previous month and repeats the mechanism used in March when the day before the data was released, the BCRA lowered the rate by 20 points. of reference interest.

The goal of reaching single-digit inflation, however, will have to wait at least until April or even May. This despite the fact that the category with the highest weighting in the index, food and drinksit would be below 10% this month, according not only to private surveys but also to data that the economic team closely follows.

Luis Caputo: “March inflation will be around 10%”

For example, until the last week of March, the Argentine Electronic Price Advertising System (SEPA) showed an advance of around 8% for the category. in stark contrast to the 12.7% it had marked the previous month. This data cannot be taken linearly, in principle, because it only captures AMBA prices and, furthermore, because INDEC collects prices not only in supermarkets but also in other marketing channels such as local stores, self-service stores and also wholesalers. Still, it is a good indicator of the trend. In fact, in a social media exchange held this week by the Minister of Economy, Luis Caputo, and his predecessor, Martín Guzmán, the former official highlighted the validity of SEPA as an indicator for the Ministry of Commerce.

“Why doesn’t the Minister of Economy use the daily information system on supermarket price variations that the Ministry of Commerce (SEPA) has, at least to check if what he sees in X is not nonsense?” Guzmán chicaned in a post by


In any case, the City of Buenos index also recorded a relatively minor drop – from 14.1% to 13.2% – confirming the trend. The essential thing about the Buenos Aires statistics is that the set of goods increased on average 9.7% while it was services that increased above the level of 16.3 percent. It is the correlate of the rate adjustment, which is also expected to have a strong impact on the INDEC measurement. However, not only does the effect of the increase in rates have a greater impact on the inflation data in the City and the Suburbs, where the greatest delay in the prices of public services is recorded, but also that in the Buenos Aires index the The weighting of services in the consumption basket it measures is greater than that of INDEC.

Conclusion: services inflation, the main driver of price advances in March, will register a smaller variation since it will average the strong adjustment of CABA and GBA with the smaller variations in the rest of the country but, also, in the basket that measures the INDEC, services have a lower weight.

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