The Limited Times

Now you can see non-English news...

Inflation forecasts for the whole year already point to 140%

2023-05-10T22:16:10.686Z

Highlights: In just three months, annual projections went from 99% to 126%.. More and more consultants are stretching their annual inflation projection. In January they forecast an annual increase of 97.6% and three months later it jumped to 126.4%. The jump in alternative dollars in the last week of April and the acceleration of food prices at the start of May lead private economists to redefine their projections. "The risks are clearly on the upside," says Juan Pablo Albornoz, economist at Invecq Consulting.


In just three months, annual projections went from 99% to 126%.


More and more consultants are stretching their annual inflation projection. EcoGo, Equilibra, FIEL and C&T are some of those that raised their estimates from the increases of recent weeks. Thus, the election year and Alberto's administration would close with a Consumer Price Index (CPI) that could exceed 140%.

Last week, the Market Expectations Survey (REM) estimated inflation of 126.4% for all of 2023. The projection already sounds old, with an April index that will be known this Friday and will be above 7.5%, according to private estimates.

While the REM has been running inflation from behind, it certainly reflects the acceleration in prices. In January they forecast an annual increase of 97.6% and three months later it jumped to 126.4%.

The jump in alternative dollars in the last week of April and the acceleration of food prices at the start of May lead private economists to redefine their projections.

Maria Castiglioni, an economist at consultancy C&T, forecasts 140% through December. Today it is already running close to that level and the situation will continue like this," he anticipates. A similar level is handled by the consulting firm Equilibra.

"We have an inflation forecast with acceleration in November and December, which would take it to 135% or 140%," says Juan Luis Bour, economist at FIEL

EcoGo expects inflation of 7.3% for April and 8% for May. "Then it will depend a lot on getting dollars: on the soybean dollar working and on gathering some net reserves," says Sebastián Menescaldi.

"There is a 150% inflation floor for the year. We do not rule out that there will be another episode of jump in the exchange rate gap that will bring inflation to double digits for some month," adds Menescaldi.

Some measurements are still placed one step lower. Among them, those of Ecolatina, which foresees an index of 130%.

For economist Santiago Manoukian, "the inflationary acceleration of the start of 2023 damaged the credibility of the economic team, once again unanchored expectations and put pressure on a crawling peg (the daily rise of the official dollar) that must be accelerated to avoid a greater exchange rate delay, feeding back the dynamics".

"An inflation fueled by a strong inertia, growing indexation and shortening in the terms of the contracts, together with the uncertainty of the electoral transition and the lack of anchors: not only that of an official dollar that acquires greater speed, but of the new increases in rates of public services and parity ", says the economist of Ecolatina.

"To this is added the impact of import restrictions, prices more sensitive to the movements of the gap, expectations of devaluation exerting pressure and the impact of the "agricultural dollar" on certain foods, with a "Fair Prices" program with little influence," concludes Manoukian.

For now, Fausto Spotorno forecasts inflation of 128%, in line with the REM forecast.

For Fernando Marull, "with inflation of 7.5% or 7.6% in April and May and without a currency jump, the index would reach 120% in 2023. But if there were a currency jump it would go to 140%."

For Juan Pablo Albornoz, economist at Invecq Consulting, "the market average is expecting even higher inflation." And it details three factors that could lead to annual inflation above the 120% that the consultancy maintains today.

On the one hand, he mentions that the debt front in pesos is not resolved. " We hope that we will have a benign outcome, although we may have stress in the run-up to the elections. Nor isthe exchange front resolved and that generates uncertainty and puts pressure on prices. On the other hand the impact of the drought on food is being seen, but we have not yet seen what happens with the next campaign."

"The risks are clearly on the upside. What could bring him calm is that there is an orderly political transition and that they get additional financing and that the Treasury can continue to roll the debt in pesos and that we do not have stress. Personally, I don't see the latter as likely," says Albornoz.

AQ

See also

The Central Bank continues the "micro purchases": it ended up with US $ 1 million for its interventions in the market

Reserves under pressure: the Central Bank retained only 10% of the soybean dollar

Source: clarin

All business articles on 2023-05-10

You may like

News/Politics 2024-01-30T10:49:26.409Z
News/Politics 2024-02-05T10:31:08.061Z

Trends 24h

Latest

© Communities 2019 - Privacy

The information on this site is from external sources that are not under our control.
The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.