what can you invest in with high inflation

The National Institute of Statistics and Censuses (INDEC) disclosed the inflation data for the month of September, reporting that the monthly variation stood at 6.2%, taking the interannual rate to 83.0%.

Thus, with an accumulated figure of 66.1%, this is the third month in which we have inflation above 6%, giving evidence of the complex dynamics in which the economy finds itself. On the other hand, in year-on-year terms, we are facing the highest level since January 1992, just when the country was beginning to recover from a hyperinflationary crisis.

Future prospects also show signs that inflation will continue at high values. According to him latest Survey of Market Expectations (REM) released by the Central Bank of the Argentine Republic (BCRA), a new adjustment was seen in its inflation estimates for the remainder of the year, taking the estimate for 2022 to a level of 100.4%, thus projecting a floor for the coming months of monthly increases of around 6%.

For the remainder of the year, economic consultants adjusted their forecast by 5.3 percentage points (pp.). Likewise, the greatest adjustment was observed for 2023, where it increased 6.4pp. taking annual inflation to 90.5%, a deterioration of expectations compared to the previous REM.

What should you invest in?

Faced with this complex scenario, where having pesos without investing generates large-scale purchasing power losses, we at IOL Investonline Research believe that positioning in CER assets represents the best option to protect value once morest inflation (always considering the maturity terms and the investor profile).

Next, we are going to present some alternatives that we believe may be useful to boost your savings, while also allowing you to protect your capital once morest rising prices in the Argentine economy.

• For investors who want to invest thinking in a short term, which would be a little less than 6 months, we suggest adding the letter X17F3which adjusts capital by CER maturing in February 2023. This instrument has an IRR of CER+3% to date and an expected IRR of 118% considering the REM estimates.

In this way, if the forecasts of the REM are fulfilled, it would manage to exceed the estimated inflation for the next twelve months.

• Another interesting option for the short term would be to add the bond to the portfolio TX23, maturing on March 23, 2023 and yielding CER +3.0% to date. It should be noted that the expected return on this bond is 125%, so it would also exceed inflation.
• For moderate profiles seeking to position themselves in pesos in the medium term, we suggest adding the letter X19Y3which adjusts capital by CER maturing in May 2023. This instrument will pay its capital adjusted for inflation on May 19, 2023, with an IRR to date of CER+3% and with an expected IRR of 120% considering the estimates of the REM.
• Lastly, for profiles with greater appetite for risk we suggest positioning yourself in the national government bond DICP that adjusts its capital by the CER and pays capital returns as of 2024. To date, this bond has an IRR of CER+10%, and offers to position itself in the long part (post 2024) of the CER curve but with less susceptibility to change in prices than other similar instruments.