2023-11-20 07:14:01
Javier Milei will receive the presidential command from Alberto Fernández on December 10. Three days after he takes office, the Consumer Price Index for November will be released, which according to some private estimates would be around double digits again.
Although the responsibility for the inflation data for the second to last month of the year does not correspond to the new government, it is the starting point for the new management in terms of economic policy. The price increase is the main problem of the daily domestic economy and which has increased in recent years.
“The data from our price survey for the first week of November showed a strong acceleration, widespread but with great emphasis on Food and Beverages. So far in the second week there has been a moderation, although concentrated in items such as Clothing and Electronic Products, which were included in Cyber Monday; “Food and beverages did not show that behavior.”
“In this way, the four-week accumulated figure was 10.8%, which suggests that inflation for the month has a floor of 10% and that it could significantly exceed if corrections occur after the ballot.”
A higher projection is given by the Libertad y Progreso foundation, which by November aims to close around 11%. However, they clarify that “the dynamics will depend largely on what happens in the week after the elections.”
“In the first half of November we see that the dynamics of food prices accelerated a little compared to the previous month and will push November inflation upwards,” Lautaro Moschet, economist at the Libertad y Progreso foundation, told PROFILE. “With this we hope that inflation for the second to last month of the year will once again approach double digits, although the uncertainty inherent to the electoral contest makes it difficult to assume what will happen,” he added.
For its part, the consulting firm Ecolatina projects a more pessimistic figure and estimates that the figure could be around 12.5%.
“Driven mainly by the Seasonal category, the month’s increase is led by the Home Equipment and Maintenance chapters (16.1%); Health (13.9%), where the increases in medications and prepaid bills stand out; and Leisure (13.4%), while Food and Beverages once again rose above the average (12.9%), after having risen below the general level last month,” the study highlighted.
In this way, inflation would return to above 10% after the slowdown in October that registered a variation of 8.3%.
It should be remembered that the data for August and September, which registered 12.4% and 12.7% respectively, were the highest records for a monthly inflation value since February 1991, which was 27%.
From Libertad y Progreso they observe that “clearly Argentina is in a monthly inflation regime in the double digits. “We are talking about the highest inflation in 32 years, since 1991.”
However, as some economists anticipated, repressed inflation could be close to 40%. “Although the October data showed an apparent slowdown compared to September inflation, we must keep in mind that we have been going through a highly distorted economy with many frozen prices,” Moschet continued. “This is unsustainable over time and repressed inflation will come to light sooner or later. That is why we hope that, despite the specific drop in the previous month, the coming months will continue to be high,” he explained.
In turn, the next government must correct another issue associated with inflation: the correction of relative prices.
It is important for the new management to cushion the rise in prices to mitigate its impact on real wages.
“The correction of relative prices will accelerate inflation and it will be difficult for salaries to follow that dynamic. We anticipate that an improvement can only be observed in the second half of 2024,” said Santiago Manoukian, economic advisor at Ecolatina.
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