Source: Nadin Argañaraz, director of IARAF.

“The acceleration of the core Consumer Price Index (CPI) has to do with a mix of products that had an impact, such as rentals, restaurants or recreation and culture,” the Ecolatina analyst said in a dialogue with Ámbito, Agostina Myronec.

For its part, the Master in Economics, Lorenzo Sigaut Gravina warned as a possible triggering factor “the re-marking of prices and wages for reasons of inertia and/or unanchored inflation expectations.”

On the contrary, the categories of Regulated prices and Seasonal prices exhibited decelerations and registered 3.9% and 5.4%, respectively.

Clothing once again led price increases

Among the divisions with the greatest weight in the general CPI, the highest average increases stood out in Restaurants and hotels (it went from 5.4% to 7.3%) and Health (it rose from 5% to 6.4%)the latter driven by authorized prepaid uploads.

For its part, Clothing and footwear once again led the increases, with a monthly jump of 9.9% (vs 10.9% in March). Specialists in the field explain that there are several reasons for the increases in this sector, among which are: supply problems due to lack of clothing workshops, recomposition of profits after the crisis experienced during the macrismo and the pandemic, the change of season and restrictions on imports, all added to the inertia that affects all prices in the economy.


Source: Nadin Argañaraz, director of IARAF.

Food and drinks it was, once again, the division that had the greatest impact on the advance of the IPC. According to official data, in this item there was a significant 5.9% increasealthough lower than that of February and March.

The problems in the supply chain and the escalation in the price of commodities at a global level, which had already started with the pandemic and was aggravated by the war in Ukraine, added fuel to the fire to the inflationary dynamics in Argentina.

Indeed, Wheat flour (16.1%) and sunflower oil (13.5%) were among the foods that increased the most in Greater Buenos Aires, affected by the jump in the world value of grains.

A study carried out by the economists Nicolás Bertholet, Gabriel Montes Rojas, and Fernando Toledo showed, for example, that a 10% rise in international food prices adds 0.5 points to inflation in the 40 countries analyzed in the study, in line with IMF calculations. “The potential effect is not negligible in the face of a sudden acceleration in the prices of energy supplies or food, basic goods for the entire economy,” they highlighted.

At the same time, they clarified that “the sample examined is characterized by showing low inflation during the period analyzed, so the effects may differ in countries with high inflation rates (such as Argentina)”.

“During April the relevant international prices for Argentina did not move too much, but it is likely that the strong shock observed in these prices during March has also filtered into the CPI for the last month,” said Sigaut Gravina in this regard.

The market forecasts inflation of 65% by 2022

The latest Survey of Market Expectations (REM), prepared by the Central Bank (BCRA), showed that the private sector generally expected an inflation rate of 5.6% for April. Likewise, the consultants and financial entities that participated in the REM raised their forecast for the accumulated of 2022, from 59.2% to 65.1%.

It is worth remembering that in March prices had climbed 6.7%, their highest monthly mark since 2002. With the April number already published, in the first quarter, an accumulated average increase of 23.1% was observed, the highest since 1991.

Inflation last 30 years

Source: Fernando Marull, FMyA partner.

Source: Fernando Marull, FMyA partner.

The Minister of Economy, Martin Guzmansaid in his latest public statements that inflation “must be attacked firmly” and with a “consistent and credible economic program.”

In this sense, the official maintains that the macroeconomic policy of his portfolio must have a “comprehensive approach”, which includes “an external block, a fiscal block, a monetary block and a complementarity that are price and income policies.”

Martin Kalosdirector of the consulting firm EPyCA, maintained that the inflationary jump in recent months would not be so alarming “if it were an isolated event.”

“The problem is that it marks an acceleration of an inertia that is far from being corrected. We must find a credible policy that gives expectations a horizon. It is not about using an anchor or two, but about converging on a path of expectations of reducing inflation, which requires coordination of economic policies and articulation with the private sector, which is not happening today,” he said.

With a similar look, Myronec sees it as difficult for the Government to appeal to traditional anchors. “In the second quarter they are closing and they are going to close parity in higher figures. In parallel, regulated prices are recovering lost ground and the Government must prevent the exchange rate from falling too far behind”, he elaborated.

Pressure on wages and poverty

The acceleration in prices stopped the slight rise that wages had had in 2021. The INDEC showed this week that real wages fell about 1% in the first quarter.

Luis Campos, coordinator of the Social Law Observatory of the Autonomous CTAreflected that in the same period the Minimum salary, vital and movillost all that it had recovered last year, and returned to the lowest levels since 2004.

Faced with this situation, Guzmán affirmed that “it is obvious” that the increase in the minimum wage has to be advanced, which traditionally takes place in the second half of the year. “We did the same with boosting income for the informal sectors, reacting immediately to what was the inflationary shock caused by the war in Ukraine,” he added.

In this line, the Government has already advanced for June the two quotas of increase in the minimum wage that were going to be given in July and August. From next month, the floor will be $45,540, against a basic basket that already exceeds $30,000 for a single individual, and drills $90,000 for a family.

“Although food prices slowed down in April, they remained with high figures, which continue to be worrying in a context in which the basic baskets already climbed well above inflation in the first quarter. That tells you what can happen with the levels of poverty and indigence in the first semester”, warned Myronec.

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