With a dollar that is still behind prices and in the midst of the debate over the rate hike, inflation in April was 6%, which implied a slowdown compared to March -the worst figure in 20 years-, but in a still very high level. For instance, it was almost two points above the same month last year. The annual data is the highest in the last 30 years.
The CPI calculated by the Indec accumulated in the first quarter of the year an advance of 23.1%, while in twelve months it reached 58%. This is the worst figure since January 1992 (76%), thus exceeding the 57.3% of May 2019. Core inflation – which eliminates regulated and seasonal prices – increased 6.7%, more than two points above last year and above March. Food rose 5.9%, slowing down compared to the 7.2% they showed in March.
The Survey of Market Expectations (REM) prepared by the Central Bank (BCRA) estimated an advance of 5.6% for last month. The top ten forecasters forecast, according to the April report, an annual rise of 65.7% in 2022 (a rise of 4.8 points above what they expected in March). In off the record, sources from the economic team acknowledge that 65% is an “optimistic scenario”. The agreement with the International Monetary Fund (IMF) estimated an inflationary range of between 38% and 48%, but in its latest economic outlook it only mentioned the ceiling of that range.
The data is known in the midst of a strong internal dispute between President Alberto Fernández and Vice President Cristina Kirchner, due to the direction of the economy and the impact of prices on wages, a fact that could hit the presidential intentions of the Front of All next year. “We are not satisfied or happy with the inflation rates”, the President said today from France. At the center of that storm was the Minister of Economy, Martín Guzmán, who has been assuring that inflation is driven by two channels: one external, due to the impacts of the war in Eastern Europe, and another linked to the impossibility of anchoring expectations by the internal war in the Government.
“Inflation must be attacked decisively and consistently. That the problem be solved in a lasting way, and that is not solved in five minutes. It requires a lot of strength in the implementation of an economic program,” the minister said yesterday on the A Dos Voces program, who once again stressed the importance of real wages rising. In March, according to Indec itself, private wages -both formal and informal- lost with inflation.
“If someone says ‘from one year to the next I solve the fiscal deficit and reach a surplus’, it cannot be done. He’s lying. What are you going to do? Is the country going to be left without investment in education and public works? We must act with common sense and rationality, ”he added regarding the government’s macroeconomic plan. He also pointed out that the emission must be lowered. Both conditions are in the agreement with the IMF (to which the accumulation of reserves is added). However, the Government has already used a good percentage -$285,000 million, or 0.4% of GDP- of the permitted issuance (1% of GDP) in the Extended Facilities Program this year thanks to the new transfer of $83,730 million from the BCRA to the Treasury on Friday.
On the other hand, the pressure of Christianity led the Government to add bonuses -not permanent, as part of the Frente de Todos intends through the universal salary presented the day before yesterday in Congress- to different segments of the population that cost, according to the Capital Foundation , some $330,000 million, almost 0.4% of GDP (a percentage close to the one that the minister promised when it came to reducing the fiscal deficit agreed to unlock dollars from the Fund). In Economy they affirm that it is the own inflation -via collection- the one that serves to finance that reinforcement of the social politics. The Palacio de Hacienda reported today that the universe of the nonos reaches 13.6 million people.
The strong acceleration of inflation also led to the multiplication of closures of joint ventures with a new ceiling, above 60%, and some in up to seven installments, such as that of Commerce (the largest in the country). On the other hand, he opened old debates about the future of the peso: “That is a delusion. To dollarize is to give up the possibility of seriously building a Nation State. It is accepting defeat as a country. What we have to do is build our own currency.” Guzmán said yesterday.
“With April inflation at 6%, the annual rate is 58%, the highest inflation in 30 years,” said Fernando Marull, an economist at the FMyA consulting firm. “The data looks worse than that of March, because the core it was 6.7%, higher than the one registered in March”.
“April inflation was 6% monthly and, even more important, core inflation, which sets the pace, accelerated, reaching 6.7% monthly. In other words, Argentina navigates ever higher levels of inflation. The average core inflation for the first quarter is equivalent to 84% annualized”, indicated in the LCG consultancy.
In the first week of May, the LCG Food Price Survey reflects an increase of 5.4% compared to the same week in April. If this data is confirmed, it would mean a contribution of 1.4 inflation points. On this -they estimated- it will be necessary to add increases of 11% in Fuels; 8%, in Prepaid; 9.5%, in Telephony, cable and Internet; 15.5%, in CNG; 9%, for domestic employees; between 15% and 20%, increase in expenses and 8%, increase for private schools in Buenos Aires. Together, they would contribute approximately 1.7 additional points in May.
“In an optimistic framework, a slowdown in monthly inflation to records of 4% supposes an annual inflation of 68.4% to December. However, this seems unlikely. On the effects of higher international inflation, at the local level, those derived from the lifting of some of the anchors that, until last year, contained the dynamics of prices will be added. The BCRA has been accelerating the sliding of the exchange rate, as promised with the IMF, and the Government advanced in public hearings to lift the rate freeze. The impacts of the first and second round will be felt in the coming months”, they indicated in LCG where they said that they already expect levels above 70% in December.