Sunday, October 1, 2023

Economic relief from deflation will take several months to arrive: Daniel Suchar

For the third month in a row, year-on-year inflation registered a decrease in prices in August, and what is better, the largest negative index in the last 10 years.

Between August last year and August this year, the prices of goods and services in the basic basket fell by 3.28%, according to the National Institute of Statistics and Censuses (INEC). This phenomenon is called deflation.

However, this economic relief will not reach consumers immediately, according to Daniel Suchar, an independent economic analyst.

Why is it difficult to understand the reduction of inflation?

It is difficult to see the progress of inflation because the indicator is an average or calculation of all goods and services in the basic basket. Some of these products, such as rent, food or drink, have increased significantly, and many people with less resources are most affected.

On the other hand, other products or services, such as airline tickets, have decreased, so most of us do not feel that inflation will decrease.

If deflation continues for a few months, is there any foreseeable reduction in the cost of living?

Economic relief occurs after a few months, mainly because prices have stopped rising and money is sufficient for more.

For example, in the case of transportation, which began to decrease a little in the distribution of goods and services, where we have to wait a reasonable period of three or four months to feel it in our pockets.

What are the benefits of deflation?

On the one hand, interest rates should begin to decline. We hope that at the next meeting of the Central Bank there will be a reduction in the Monetary Policy Rate, which will reactivate the economy.

However, this could also mean that we have a slow economy, although we hope that is not the case.

Nation World News Desk
Nation World News Desk
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