Inflation is one of the items that most worries Argentines.
The CPI accumulated in the Alberto Fernández era exceeded 1000% , and one of
Javier Milei
's promises
is to lower it strongly.
To achieve this, the new administration is carrying out an
orthodox shock plan
, based on a fiscal, salary, exchange rate and monetary-financial anchor.
According to a private study, there are reasons to think that all this
may not be enough to lower the price index that is expected to slow down in February
to 15%;
but then it could return to 20% in the coming months.
According to the Scalabrini Ortiz Center for Economic and Social Studies (CESO), they view the success of the program with skepticism, because
"it does not attack the inertial factors that explain the current inflationary regime."
What is the reason for this?
For the private study,
"in the coming months there will be significant increases in rates for public services
, transportation and items such as education that have a strong seasonal component," and this "will cause a new round of price increases."
"In a scenario like the current one, the inertial factor is a key component and
if it is not combated it will be difficult for inflation to decline steadily
," highlights the document, which also warns that
"none of the anchors mentioned seem to address this problem."
"In a high inflation regime,
any price shock in key variables
(such as a sharp rise in the dollar or tariffs) accelerates inflation not only in the present, but also in the future since it is perpetuated by the inertial components ( indexation of contracts and expectations)", he indicates.
v1.7 0421
Inflation in the last year
In %
BY ITEMS
Source:
INDEC
Infographic:
Clarín
And in this sense, they emphasize the increases in the rates of public services, such as electricity, whose schemes have already been published and these
"increases will have a strong impact on inflation in the coming months
. "
The same, according to CESO,
"range from 71% to 190%
in the case of the variable charge, and
up to 310% in the fixed charges
. "
"In addition, the public hearing held last week anticipates
a reduction in subsidies that would imply 1% of the GDP that
households and businesses will have to face," he adds.
In addition, increases in public transportation - also due to the removal of subsidies - and increases in fuel prices will come into play.
Another point to take into account, due to a seasonal issue,
is the "beginning of the school year",
which means that in March the items “Education” and “Clothing and Footwear” suffer strong increases.
"There are many prices that are already fully indexed. The most practical example is rentals, but it is not the only one," the report states.
And he adds: "Although we mentioned that a
Government tool is the salary anchor,
the truth is that, due to pressure from the labor movement, it may not have an effect on registered workers in the private sector."
In fact, this is what is observed in the first months, where the parities of numerous sectoral branches match or even exceed the current inflation.
Finally, CESO economists highlight that "
the exchange rate anchor appears not to be sustainable
. "
As the months approach when the bulk harvest is liquidated, and the current exchange rate loses compared to inflation,
pressure from the different exporting groups for a new devaluation will appear
.
In fact, the IMF has already gone ahead and
suggested accelerating the crawling peg from 2% to 8%
monthly.
"When this happens again
we will have another round of price increases
that will accelerate or maintain (depending on the future pace of exchange rate policy) inflation at high levels, even in a context of the strong adjustment program with an economy in clear recession," he concludes. .
S.N.