Inflation infographic 20221119
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With or without the World Cup, inflation is the party that the Government – ​​this and the previous ones – could not win, at least for the moment.

At the end of the year in which the ruling party maintains the hope of avoiding triple digits, private estimates take 100% for granted. In addition, this situation leaves an inertia for the beginning of 2023, an electoral year, in which the projections of private consultants consulted in a PROFILE survey estimate a floor of 20% for the first quarter of next year. Ecolatina, Libertad y Progreso, Abeceb, Ferreres y Asociados, Perspectivas Económicas, Iaraf and Equilibria were consulted.

For a month, the only concern that the Argentines will have will be if the Argentine national team manages to become champion. On this point, the Minister of Labor, Raquel “Kelly” Olmos seems to agree. “Then we continue working for inflation, but first let Argentina win,” said the official this week, who later had to apologize for her statements that they were an unnecessary goal against.

The Government seeks to avoid at all costs the three digits in the annual CPI this year. In this sense, the economist Nadín Argañaraz explained: “To meet the goal of 95% year-on-year of the budget, in November and December the average monthly inflation should be 5.1%.”

The albiceleste team arrives in Qatar in third place in the FIFA ranking. But it is not only in soccer that it ranks in the top positions, in terms of inflation as well. According to a report prepared by Argañaraz, inflation in Argentina, which in October was 6.3% according to INDEC, was the highest among forty selected countries, including Bolivia, Colombia, Brazil , Paraguay, Mexico, Chile, Peru and Uruguay.

For the Abeceb consultancy, led by Dante Sica, although monthly inflation would not grow much above current monthly values; The interannual inflation rate would accelerate in January and February 2023, as a result of the fact that two months with monthly inflation rates higher than those of January and February 2022 enter the calculation.

The three annual digits for 2022 would no longer be in discussion for private companies

For his part, the economist Luis Secco explained to PROFILE that the only thing the government is trying to do is try to get the dollar, now with relative success, from the front page of the newspapers, “because it believes that the whole problem of inflation is the devaluation expectations or what happens to the blue dollar”.

And he added: “Within this framework, our projections reflect that, beyond the decimals, the new level of inflation of between 6 and 7% per month is here to stay.”

So, whether or not Argentina wins this World Cup, inflation will continue to be the great national problem. According to the survey carried out by PROFIL to different consultants, the first quarter of 2023 would be at 20%. The same period but in 2022 it stood at 16.1%, almost 4 points less.

The start of the year prints the pulse of what the pockets will feel in 2023

This quarterly value corresponds to the fact that inflation would be sustained at a monthly rate of at least 6%, far from the Government’s objective of converging towards a monthly figure of 4% with which the ruling party aspires to reach the next elections, and consistent for the 60% that was raised in the Budget.

For Libertad y Progreso, Precios Justos “could have an impact on the CPI measurement in the very short term, that is, in December, helping the index for that month to move away from 7%. This is because the majority of Food and Beverages are included in the program, an item that is the one with the highest weight in the CPI”. “However, it is unlikely that it will slow down inflation persistently,” they concluded.

Relative Value Distortion

The latest inflation data for October, which was 6.3%, showed that there were six items above the general CPI and another six were below that line, a sign that the current inflationary problem does not only have as a consequence a higher nominal value, but also brings other complications, mainly relative price distortions.

“This dynamic adds uncertainty to the inflationary process and, in the case of those prices that are more behind, generates upward pressure due to their updating,” said an Ecolatina report.

The former Vice Minister of Economy, Emanuel Álvarez Agis, in an interview with the Rebord Method, explained that this is a crucial point to solve the price increase. While in our country, according to the former official, footwear is around $50,000 and a rent close to $100,000, in the United States it corresponds to an average of $100 and $1,000, respectively.

That is to say, in the Argentine case, a rental is two shoes, that is a relative price. While in the second case that relationship is 10 times between both values.

“A good part of the regulated prices or with some control by the Government continue to express a delay with respect to the general level, such as the exchange rate, public transport, gas, fuel. Sooner or later it will be necessary to adjust them, which would inevitably have a strong impact on the already high nominal value of the economy,” the paper added.

“In this sense, aligned relative prices constitute a necessary condition within a potential implementation of a stabilization plan that seeks a path of sustained disinflation going forward,” concluded the Ecolatina study.

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