Tuesday, October 3, 2023

This week the data for August is known, which will jump to double digits

This Wednesday, INDEC will release data on inflation August, a month marked by decrease in value on official exchange rate after PASO and the volatility of alternative dollars. So various consulting firms have already announced that a double-digit change is expected in the CPI last month. Which, in addition, leaves a “Raised floor” for September.

In fact, if private forecasts come true, monthly inflation in August will be the highest since 1991.: Estimates from various surveys are around 11%, although some surveys put the figure above 12%.

In this scenario, the consulting firm LCG analyzed: “With a nominal value that navigates a floor of 6.5%-7% monthly inflation, the 22% devaluation ordered by the BCRA is set up. Despite this, the exchange gaps were not able to compress, but deepened quickly, which also pushed the increase of the same exchange rates.

Thus, the survey of food prices conducted by the company shows a monthly inflation of 10%. “In the same way, August regulates the increase in prices such as fuel, bus, school, communication, etc., which contribute about 2 pp to the total index.. Based on this, and assuming an almost 50% passthrough in a context of high indexation, we estimate that August will mark inflation of around 12% per month (123% annual),” they detailed.

For its part, the Eco Go retail price survey recorded a “Strong acceleration after PASO”, to end the month with an increase of 11.5%, as indicated by the company. “In August, food and beverage prices registered an increase of 12.7%, which represents a strong acceleration after the 7.3% obtained in our survey in July. The biggest increase occurred after PASO and the devaluation of third and fourth week of the month with an increase of 4.8% and 5.8% per week, record series figures (in the last six months, the increases were 1.7% per week on average) ”, they analyzed.

The CPI measured by the Libertad y Progreso Foundation registered a monthly increase of 10.7% in August (In July the company measured 6.6%, compared to 6.3% reported by INDEC). “This result marks the highest monthly increase since March 1991, even surpassing the record of April 2002, amid the exit from Convertibility. In this regard, the interannual change amounted to 120.8%. You should go until September 1991 to find a record of such magnitude,” explained the company. The category “Food and non-alcoholic beverages” showed an increase of 9.9%, with an impact of 2.3 pp on the index.

In this regard, the S&T survey recorded an inflation of 11% for the GBA region (it was 6.3% in July, the same figure as INDEC). “Therefore, the monthly change exceeded the previous peak of 10.4% in April 2002, immediately after the exit of Convertibility, and equal to March 1991, the month before the start of that program. It should be noted that August is a favorable month from a seasonal point of view, because inflation is usually moderate after the peak in July due to tourism,” the company explained.

Meanwhile, for The Ecolatina August inflation in GBA was 11.2%, while for Orlando Ferreres it was 12.2%.

A high floor for September

Consumption Inflation Price Basic Basket Supermarket

As Daniel Artana wrote in the FIEL Foundation’s “Situation Indicators” publication, “the price estimate made by FIEL for the City of Buenos Aires suggests. that inflation in the month of August is between 12% and 13%and since the CPI is measured for the average of the month, it is likely that a similar number will be repeated in September due to the carryover effect of the second two weeks of one month on the average of the following month.

The increase registered in the CPI during August created a carry-over effect of more than 4 points for the September index. Assuming that there are no other shocks like in August, the dynamics of the underlying inflation has brought us closer to double digits. Although the price freeze established by the government, which includes fuel and transportation and others, will help temporarily moderate the index. But at the cost of continuing to accumulate suppressed inflation,” said Eugenio Marí, Chief Economist of Libertad y Progreso.

For September we expect the second month with double-digit monthly inflation. The drag for the second two weeks is the result of the shock caused by the surprising result of PASO, with a long pass-through of the recent discrete jump in the official exchange rate and the worsening of the uncertainty that this change of scenario brought it. , will mean that the dynamics of price increases remain high and unstable”, they detailed from Ecolatina.

Nation World News Desk
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