Depressed dollar, ironed rates and price controls: the government’s combo to slow inflation in July


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Indec will release data from inflation correspond to July. In the government, voices repeat themselves that the number will be lower than in June and that will mark forcefully one slow-down of the escalation observed in the first half of the year, when they added more than 25%.

the economists, meanwhile, indicates a CPI that it can be 3% or even a few tenths for below for the first time in the last 10 months. Even if they alert for what will happen: after the electoral calendar for which they foresee that the regulated tariffs, ironed today, and the exchange rate start to Get out of the corset.

According to the Market Estimates Survey (REM), prepared by the Central Bank, the main concern of economists is to how prices will take off in the last month of the year and the first two months of 2022.

As a starting point, the consent of the main consulting firms peaks at 3% inflation in July. Some even place it at 2.8%, the lowest level of the year and unprecedented since September 2020, the last month of the most severe restrictions due to the pandemic.

TO August, private screenings indicate 2.7% CPI, identical variation in September and October and a 2.8% for November. Inflation in 2021, when they stand at 48%, almost 20 points above the initial target that the Minister of the Economy, Martín Guzmán, reflected in the budget.

While, after the elections, they predict that prices will pick up a bullish path and they estimate increases of 3.1% for December and 3.2% for January 2022. Indeed, economists argue that the slow-down of inflation is conjunctural and is Related with key factors:

  • Dollar ironing: cumulates an 11% increase in the price of the wholesaler or the commercial, against more than 20% of the financial options, which have also intervened with more important regulations since mid-July.
  • Regulated corset: Fuel values ​​rose 34% in the first five months of the year, since when they were frozen. Added to this is the update of lower single-digit electricity and gas prices.
  • Agreements and controls about the food: Treatment rates, Super Close, meat export stocks and a frozen securities deal until the election add to the “decelerator” combo.

“The reasons for the drop (in the July CPI) will allow us to specify its duration, as well as its sustainability and the changes it could produce within the economy”, summarizes a recent report by the consulting firm Ecolatina .

In this regard, he specified that this factor, added to a brake on the escalation of international values ​​of commodities and the dollar “under control” will make the inflation rate passes 4% per month on the first semester a 3% in the second.

But the consultant warned that “the big problem is that this stocking won’t last, but will become unbearable under its own weight: When the anchors are forced and arrears are piling up, the momentum ends up wreaking havoc as soon as possible. Consequently, Not only will we have inflation above 40% in 2021: it will be the same in 2022.

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