Buenos Aires — The inflation in Argentina slowed again in May and reached its lowest level in more than two years. The Indec revealed this Thursday that the Consumer Price Index stood at 4.2% and thus chained the fifth consecutive month of deceleration and the second consecutive single digitwhile The interannual variation showed the first decrease in almost a year, dropping up to 276.4%. Despite this, the accumulated inflation in the year reached 71.9%.
The data of May inflation was even below the official expectation. Both President Javier Milei and the Minister of Economy, Luis Caputo, had anticipated this week that they expected the May figure to be less than 5%. The measurement It was also lower than the market consensussince consulting firms anticipated that it would be in the range of 4.5% to 5%, while the latest Survey of Market Expectations (REM), published last week by the Central Bank, had reflected the expectation that it would be at 5.2%.
Inflation May 2024
From the measurement it was also highlighted that core inflation stood at 3.7%the lowest record since January 2022. The highest increase division in the month it was Communication (8.2%), due to increases in telephone and internet services. They followed Education (7.6%)by increases at all educational levels, and Alcoholic beverages and tobacco (6.7%), due to the rise in cigarettes.
The division with the highest incidence In all regions, for their part, it was Food and non-alcoholic beverages (4.8%), where the increases in Vegetables, tubers and legumes stood out; Milk, dairy products and eggs; and Oils, fats and butter.
At the level of the categories, Seasonal (7.2%) led the increase, followed by Regulated (4%) and the Core CPI (3.7%).
Minutes after Indec made the inflation data for May official, the Minister of Economy, Luis Caputo, highlighted the result on social networks. “With the May data, the ongoing disinflation process deepened”, he noted in his X account.
“The three-month moving average of the National CPI variation was at the lowest level since July 2023, and was almost six points lower than the six-month moving average. This last indicator, which still incorporates the months where the main relative price adjustments occurred (exchange rate, goods and services under price controls and public service rates), is already the lowest since December,” he added.
Hours later, he added: “It is an achievement of all Argentines. We are getting closer to building the country we want. Let’s recover hope and pride in being Argentines”.
Will the slowdown end in June?
Going forward, however, Private consultants warn that the slowdown trend could be interrupted. If that happens, the The return of positive real rates that the Government’s economic team highlighted could be delayed.
In the last few hours, both Caputo and the Secretary of Finance, Pablo Quirno, announced the end of the stage of negative real rates in Argentina after the Treasury allocated ARS$5.4 billion in Lecap maturing in September at an Effective Rate Monthly 4.25%. To remain positive in real terms, inflation in June and the coming months should remain below that record.
But private measurements reflect that June inflation could be above that of May. Rocío Bisang, economist at Eco Go, says it is possible that the slowdown in prices could be interrupted in the current month. “We have to see how the core and consumption dynamics continue, but in general terms, We expect that the increases in regulated prices will push the indicator upwards, possibly remaining above May.”, he expressed.
A similar diagnosis is offered by Guadalupe Birón, an economist at Empiria. After remembering that in May the freezing of prices in certain regulated sectors (mainly transportation and rates) and the measure of the Ministry of Commerce regarding the price of prepaid services helped inflation remain below 5%, he notes that “This downward trend would not be sustained in June”.
“In June, based on our advance food data and based on the increases in electricity, gas and other regulated services, we believe that this decreasing trend would not be sustained,” he said.
For his part, Camilo Tiscornia, director of C&T Economic Advisors, hopes that the June record could be similar to that of May, and could even be somewhat higher. “In June there has been a strong impact of the adjustment of public services, of around one point for electricity and gas,” he points out. However, he adds: “In other things there is quite a bit of moderation. In fact, We are seeing a very strong drop in vegetables, which had risen a lot in May. That helps offset the impact of public services a little.”.
When price variations in other sectors are analyzed, adds Tiscornia, “a lot of moderation” is also observed, and There are no increases that have changed too much compared to May.
“A prioriunless there is a price break between now and the end of the month, I don’t know if June inflation is going to be very different from May. It’s probably a little higher, but with the approval of the Bases law, it seems to me that this should help calm the financial part. And that should favor the behavior of prices to continue a little like in recent times,” she concluded.
