Inflation in February was 13.2% and accumulated 276.2% in the last 12 months

Although it slowed, the inflation rate remains high (Reuters)

Inflation in February was 13.2% and accumulated 276.2% during the last year, as reported this followingnoon by the National Institute of Statistics and Censuses (Indec). The monthly data implied a slowdown compared to the 20.6% that January had recorded and the 25.5% in December, which was the highest number since February 1991. The accumulated figure for 2024 stood at 36.6 percent.

“The division with the greatest increase in the month was Communication (24.7%), as a result of increases in telephone and Internet services. This was followed by Transportation (21.6%) –due to increases in public transportation– and Housing, water, electricity, gas and other fuels (20.2%) –due to increases in the electricity service–,” said Indec.

The Food and non-alcoholic beverages category rose 11.9%, below the average. According to Indec, the main increases were in Meat and derivatives, Bread and cereals, and Milk, dairy products and eggs. The two divisions that recorded the smallest variations in February were Recreation and culture (8.6%) and Clothing and footwear (7.2%).

At the category level, Regulated (21.1%) led the increase, as a result of the strong increases in public services, followed by the Core CPI (12.3%), while Seasonal registered an increase of 8.7 %.

The data released by Indec differs from the consensus expectations of analysts, it stood at 15.8% monthly, according to the latest data from the Survey of Market Expectations (REM) prepared each month by the Central Bank.

Before the official figure was known, President Javier Milei had said that it would be below what was expected. “It’s a great number,” he anticipated in television statements. Previously, Economy Minister Luis Caputo had dared to announce in an interview that the CPI published this Tuesday would be “closer to 10% than 20%.”

After the data was released, the Presidency of the Nation indicated in a statement that the “forceful slowdown in prices” with respect to the previous two months was due to “the work of the National Government to impose strong fiscal discipline.”

“The inflationary rise that we face is a product of the uncontrolled emissions of recent years, and the waste generated by the economic program of former minister Sergio Tomás Massa,” he added.

“On December 10, 2023, in his inauguration speech, President Javier Milei informed the Argentine people that they were facing inflation approaching 15,000% annually, once morest which he would fight ‘tooth and nail’. “That is the commitment assumed and the non-negotiable objective,” the statement concluded.

The official expectation of a greater drop in inflation was further reinforced with the decision of the Central Bank, announced last night, to lower the monetary policy interest rate from 110% to 80% (TNA).

Beyond the specific figure, the Government is concerned regarding the prices of the basic basket. This arose from a meeting that Caputo held with supermarkets yesterday and in which Treasury sources leaked complaints from the official to businessmen for price markings.

“The minister (…) placed particular emphasis on the fact that the prices of mass consumption products do not reflect the new economic reality today. In this sense, alternatives were debated to combat the excessive increase in prices and thus protect consumers,” indicated from Economía.

Along these lines, presidential spokesperson Manuel Adorni announced this morning that they will release imports of basic basket products and medicines with the aim of helping to counteract price increases in the local market.

Among other points, it was detailed that the BCRA will reduce the payment period for imports of food, beverages and cleaning, care and personal hygiene products. They will go from a payment scheme in 4 installments at 30, 60, 90 and 120 days to a payment term in a single installment at 30 days, lowering the financial cost of entering these products from abroad.

It was also determined to suspend, for a period of 120 days, the collection of additional VAT and income tax on imports of these products and medicines.

Among the main products that will enter the regime include bananas, potatoes, pork, coffee, tuna, cocoa products, insecticides, shampoos and diapers, according to a non-exhaustive list distributed by official sources. The list will be much broader than that.

“This measure will encourage the importation of basic basket products whose price in the local market is higher than the international price, which will contribute to greater competition and, consequently, a drop in inflation and the price level of these products.” products,” they explained from the Ministry of Economy.