The removal of subsidies from the Milei government will have a strong impact on the variation in retail prices this month.
The increases in electricity and gas rates, established by the government of Javier Milei From the removal of subsidies, they generated a strong jump in the inflation for the first week of June, according to the first high-frequency measurements published by consulting firms.
Fausto Spotornodirector of OJF & Asociados, said 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.
“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 specific shock. Core inflation – which excludes regulated prices such as tariffs – could close around 4%, so it will continue to decline,” said Spotorno.
The measurement you make FAITHFUL In the City of Buenos Aires (CABA) the price movement of the first week of June was placed at 3.8%. Of that total, they highlighted, 1.2 points corresponded to increases in electricity and gas rates, reported the Infobae site.
“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 four weeks and 287.8% in the last 12 months. The previous week broke the trend of decreasing inflation, comparing the first weeks,” highlighted the Latin American Economic Research Foundation.
Despite the variations due to the increases in public services, the sector estimated the core index, which excludes regulated prices, will continue on a downward path.
In the May “Market Expectations Survey” (REM) of the Central Bank (BCRA), the firms consulted estimated a monthly inflation of 5.2% for May (-2.3 pp compared to the previous REM). For June they projected monthly inflation of 5.5% and for the year of 146.4% y/y (-1.3 pp and -15.0 pp in relation to the previous survey, respectively).
Regarding the Core CPI, all REM participants placed their forecasts for May at 5.0% and for June at 4.8%. Those who best predicted this variable in the past (Top-10) expected inflation of 5.3% for May, 5.5% for June and 143.5% y/y for 2024.
The Minister of National 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 taxes, which were scheduled for last month.
