Inflation: May would exceed 9%, but Economy believes that its intervention prevented it from being higher

behind the 8.4% April, and while waiting for the publication of the Consumer Price Index by INDEC, different consultancies assure that inflation in May would not drop from the previous record and would even exceed 9%.

Meanwhile, sources from the Palacio de Hacienda highlighted the decision to intervene in the markets to avoid a devaluation during the run in the last week of April, which could have caused a jump “uncontrolled” in the remarks.

The survey of retail prices of the C&T consultancy for the GBA region presented a monthly rise 8.7%, surpassing the variation of April and May of last year. Thus, the twelve-month variation climbed to 118.9%, the mayoress since August 1991.

For their part, and with a less optimistic look, from Indecom they assured that prices grew 9.2% in May, accruing an increase in 41.3% in the first 5 months of the year.

“Disaggregating the products of the basic food basket that sell the most, that is, they have a regular presence on the Argentine table three to four times a week, in categories such as sparkling water, breakfast (infusions, herbs, etc.) . ) and Warehouse (farinaceous, oils, dairy products, etc.), the measurement showed an even higher rise, standing at 10.8%”, indicates the Indecom report.

Meanwhile, according to Ecolatina’s IPC GBA, the explosion reached 8.9% monthly (+117.4% year-on-year), accelerating for the fifth consecutive month.

In this way, so far this year prices marked a rise of 42.2%against the 28.1% registered in the same period of 2022.

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“The acceleration increased mainly due to the drag left by the increases of the last week of April, strongly motivated by the jump in free dollarsthat were not fully captured in the April index, together with increases in public service rates,” the consultant said.

“Inflation in the month of May drops compared to the data in the month of April in the Food category. However, it still marks a upward trend in general terms with an advance of 8.7%”highlights Damián Di Pace, Director of the Focus Market consultancy.

This index reaches that level due to increases in the prices of services such as prepaid, tolls, fuel, taxis, public transport, private schools, electricity and gas services, among others, DiPace explained.

What did the economy expect about inflation?

Sources close to Minister Sergio Massa, who is on tour in Beijing these days, trust a PROFILE that “the intervention of the Central Bank in the secondary market replaced calming the remarks”, and she was confident that “That result will be seen in inflation in May.”

However, avoid putting the number to the forecasts, and They admitted that the CPI rate is outside the margins projected by the economic administration.

Massa estimated to have a inflationary rhythm closer to 3%as he had publicly declared, but without taking into account the impact of the drought on the economy in general, and on prices in particular.

“You have to take into account that they fell a twenty% income and that put pressure on the lack of supply in different sectors that put pressure on prices”, clarified a source closely linked to the Minister of Economy.

Massa’s decision to intervene in the markets to stop the currency run, when the gap between the official dollar and the financial ones grew, collided with an order from the International Monetary Fund, and left the anger of the second in the IMF pecking order, Gita Gopinath.

However, in the Palacio de Hacienda they assured that the multilateral credit organization “admitted the intervention as positive”, by maintaining that an uncontrolled devaluation “was going to generate damage to the population”, based on inflation, according to trust this medium.

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Food: The category that worries the most

Regarding food, from Ecolatina they affirm that the item grew 1.7 percentage points below the general level (+7.2%), and had the lowest incidence at the general level in five months.

According to the C&T survey, food and beverages grew 8.4% and although the month started off with great momentum, it later eased off. “Vegetables, dairy products and flour derivatives stand out, as well as food consumed outside the home and to take away, ”explained the consultant.

Meanwhile, from EcoGo they point out that the inflation of food consumed at home in May would climb to 8.6% monthly. “If we also consider the evolution of food consumed outside the home (10.7%), food inflation would reach 9%”, affirmed the consultant.

For its part, LCG highlighted that there were 8 categories that were above the average increase (0.32%) in the last week of May.

Oils was by far the one with the highest increase registered with 9.76%; sugar, honey, sweets and cocoa (3.77%); dairy products and eggs (3.13%); bakery products, cereals and pasta (2.63%); condiments and other food products (2.20%); drinks and infusions to consume at home (1.86%); ready meals to go (1.73%) and fruits (1.01%).

Meanwhile, the meatafter several months on the rise, fell 2.62% and it is 12.9 percentage points from the average of the rest of the foods, which shows that it could still have a run in price.

For Focus Market, in the top 10 products that increased the most in May 2023 are: rice (+31.5%), yerba (+18.7%), broths (+16.4%), empanada tapas (+15.2%), chocolates (+13%), ready sauces (+12.3%), cookies (+12%), hair (+11.9%), milk cream (+11.1% ), and milk (+10.3%).

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Other items

According to Ecolatina, the category of Housing and Basic Services, which grew 17.1% monthly, was the one that had the greatest impact on the general level, driven by increases in electricity, gas, expenses and rents.

On the other hand, the monthly increases in Leisure (+11%), Education (+9.9%) and Household equipment and maintenance (+9.4%) stand out.

Inside, the greatest increases were seen in Noodles and pasta (+9.7%), Fish and shellfish (+17.7%), Cheese (+9.7%), Milk (9%) and Ready-to-eat meals. carry (+17.2%).

Along the same lines, according to the C&T report, the item with the greatest increase was housing (11.6%), mainly reflecting increases in gas and electricity.

Miscellaneous goods and services ranked second, with an increase of 10.6%, explained by cigarettes and toiletries.

Leisure behavior (10%) was strongly influenced by the rise in financial dollars since the end of April, which was reflected in tourism and electronic products.

In health, the 11% increase in medicines stood out, which was added to a new adjustment in prepaid.

RD