Rate increases triggered inflation in the first week of June and the deceleration streak could be broken

Rate increases triggered inflation in the first week of June and the deceleration streak could be broken
Rate increases triggered inflation in the first week of June and the deceleration streak could be broken

This month the Government resumed the “honesty” of relative prices. REUTERS/Matias Baglietto

The increases in electricity and gas ratesfrom the removal of subsidies that the Government of Javier Mileiresulted in a sharp jump in the inflation of the first week of June, according to the first high-frequency measurements published by consulting firms.

Analysts predict that the variation in Consumer Price Index (CPI) which publishes the Indec It will be higher than that of May and will break a streak of five consecutive months of deceleration. In any case, they anticipate, the indicator that excludes regulated prices will continue on a downward path.

Fausto Spotornodirector of OJF & Asociados, told Infobae that the consulting firm’s survey showed that the first week of June ended with an inflation of 5.5% compared to the five weeks of May.

From June there will be a reduction in subsidies in energy rates and there will be strong increases (Illustrative Image Infobae)

“Increases in public services can lead to the monthly CPI ending between 6.5% and 7% accumulated. We do not see that the trend is a constant, it is a shock punctual. Core inflation – which excludes regulated prices such as tariffs – could close at around 4%, so it will continue to decline,” said Spotorno.

The measurement you make FAITHFUL in the Buenos aires city placed the price movement of the first week of June at 3.8%. Of that total, they highlighted, 1.2 points correspond to increases in electricity and gas rates.

“Regarding the first week of May, prices grew 7.1% and 299.7% compared to a year ago. The largest weekly increase corresponds to Regulated (10.8%). The core marked 2.9% in the week, 5.9% in the last 4 weeks and 287.8% in the last 12 months. The previous week broke the trend of decreasing inflation compared to the first weeks,” highlighted the Latin American Economic Research Foundation.

The Minister of Economy, Luis Caputo, anticipated that the CPI for May will be below 5% monthly, in line with what the private surveys had indicated. This result was also achieved from the postponement that Caputo defined in increases in electricity, gas, transportation and fuel tax –which have an impact on the pumps– that were scheduled for last month.

In a context of depressed consumption, food inflation continues to decline (EFE/ Juan Ignacio Roncoroni/File)

Since this month, the Ministry of Economy has resumed the path of recomposing relative prices. Last week the Ministry of Energy announced a reduction in subsidies focused, especially, on middle- and low-income residential users that will result in increases of more than 155% in final bills. In July the bills will begin to increase every month based on an indexation mechanism based on future inflation that has not yet been officially reported. Strong jumps will be added in the services of subway of the city and water in it Buenos Aires Metropolitan Area (AMBA).

That is why by June analysts expect inflation to jump and interrupt a five-month streak of deceleration from the 25.5% that triggered the December devaluation. January marked 20.6%, February 13.2%, March 11%, April 8.8%, the latest Indec data available, while the Government expects a percentage of less than 5% for May.

In fact, the Survey of Market Expectations (REM) which published the central bank Last week it had shown that the analyst consensus was a CPI of 5.2% for May and 5.5% for June. However, the survey was carried out at the end of last month so it did not consider the effects of the removal of subsidies on energy rates that was announced on Wednesday.

On the other hand, the REM expects core inflation to slow from 6.3% in April to 5% in May, to 4.8% in June, a rebound to 5% in July and from there a slight decline until the end of the year. . This is the data to which the Government pays the most attention and the one that the BCRA uses to calibrate its policy. interest rates.

 
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