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The 6% in January complicates activity and economic management


Move away from Massa's claim to have falling inflation for this first quarter. In turn, the exchange rate and the interest rate could be altered by this rise in prices.

The inflation data for January, 6% and 98.8% year-on-year, 

further complicates activity and economic management.

For now, with the drag that it leaves for February plus the rise in prices this month, it moves away from Sergio Massa's claim to

have falling inflation for this first quarter

and comply with the guideline of 60% of the National Budget.

An important piece of information is that regulated prices – so called because they depend on the decision of the National Government or the Provinces –

rose 7.1%

(7.5% in Capital and GBA), which indicates that part of the inflationary pressure

comes from of the official decisions themselves.

Another important fact is that the average 6% breaks down to 5.4% in the prices of goods and 7.7

% in the prices of services, such as prepaid, recreation, tourism -which impacts more on the middle sectors.

In this way, without diminishing the inflationary pressure of

food - they increased on average 6.8%

- which hits the poorest sectors the most, now the pressure of tariffs and prices on the middle class is intensifying.

The INDEC Report also highlights that in one of the regions heavily affected by poverty - NOA (Northwest) the CPI

rose 6.3% with food with an increase of 8.1%.

On the other hand, 6% leaves a

very strong pressure on March when the return to classes triggers inflation

in Education that both in December and January had almost no variation.

In turn, both the exchange rate and the interest rate could be altered by this rise in prices.

The Central Bank must define how it follows the devaluation course of the official peso and if it maintains the interest rate for fixed terms because financial placements in pesos have been misplaced.

But it carries the risk of further indexing the debt of the Central Bank itself.

It also complicates the

sought-after de-indexation of prices and salaries for the negotiation of contracts

and work agreements that start with force in March and April.

There is already tension in the salary negotiations of Bankers and other unions, at the same time that the renegotiations agreed upon in the second half of 2022 expire, which must now conclude with higher salary increases.

On the other hand, the percentage of inflation shows that the so-called "fair prices", one of the tools that the Economy bet on to "hold" the inflation rate, did not give results, to which is now added the effectiveness that

the agreement on the prices of certain cuts of meat.

Source: clarin

All business articles on 2023-02-14

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