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How far will inflation go this year in Argentina according to the largest bank in the United States - Infobae
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Hasta dónde llegará la inflación este año en Argentina según el banco más grande de Estados Unidos
El JP Morgan dio a conocer un informe tras la difusión del índice de abril por parte del Indec; qué dijeron de la postergación de la suba de tarifas
www.infobae.com
May 15, 2024
JP Morgan released a report after the dissemination of the April index by Indec; What did they say about the postponement of the rate increase?
By Martin Kanenguiser
What is the inflation forecast for Argentina from the largest bank in the United States?
After April's inflation data, the largest bank in the United States stated that the rise in prices in Argentina will be 5.5% monthly in the second half of the year and will reach 155% at the end of the year.
In addition, he clarified that there is a significant portion of “repressed” inflation and that the Government must move forward in adjusting relative prices so that the drop in prices is sustainable.
A JP Morgan report indicated that, “high-frequency inflation data shows a food CPI of 5.4% monthly through the second week of May.”
“Given the announcement of the postponement of regulated price adjustments scheduled for May, this would be consistent with a general inflation level close to 5% monthly,” the Morgan analysts indicated.
“It should be noted that the weight of the food CPI in the Indec CPI has increased by around 5% since December 2019, with the weight of regulated prices decreasing by a similar amount (-6%).”
Inflation April 2024
In turn, they indicated, “the strong deceleration of the food CPI observed during the year has had a stronger impact on the level of general inflation.”
In any case, they clarified that "although we are still waiting for greater clarity on the pace of adjustments to regulated prices, we continue to estimate repressed inflation of around 7% to realign relative prices to the levels observed in 2018."
In addition, Morgan experts indicated that “the prices of regulated services continue to be 30% below the levels observed in April 2018 (at constant prices).”
In this context, they predict that “inflation at the end of the year will reach 155%” , very close to the forecast of the International Monetary Fund (IMF). In particular, they estimated that "in the second half of the year, inflation would average 5.5% per month in our estimates assuming that tariff adjustments are resumed and the Government begins to gradually relax capital controls."
Relative price adjustment
“Moving towards reducing the (still large) imbalance in relative prices is a necessary condition for a path of sustainable disinflation in the future,” stated the analysts at the North American bank.In addition, they considered that last month's result "occurs in the context of the contraction of domestic demand, the ongoing fiscal consolidation and the stability of the 2% monthly exchange rate fluctuation margin."
For this reason, “the sequential pace of the last three months was reduced to 235.4%” and the underlying CPI was once again in single digits for the second consecutive month.”
“The core CPI slowed further, to 6.3% monthly (contribution of 4.5% percent), compared to 9.4% monthly in March, and the 14% monthly average increase for the three months previous”.
Javier Milei celebrated inflation and supported Caputo
“It should be noted that the seasonal adjustment shows a strong slowdown in core inflation without food, up to 198.8% in annualized terms, from 396.1% the previous month,” they highlighted.
“The slowdown in inflation was once again widespread, since all categories, except one, decreased in the month. It should be noted that food prices once again led the monthly slowdown, with a rate of 6.5%, compared to 10.5% the previous month," they stressed.
In addition, transportation and education “also experienced a strong slowdown in the month, with a joint decrease of 1.3%.”
With the April result, Argentina maintained first place in the global inflation ranking at a monthly and annual level, above Venezuela, which registered an increase of 2.9% in April and 87% in the last 12 months. The rest of Latin America exhibits single-digit annual inflation, with Peru at the lowest at 2.4%. In global terms, Türkiye ranked third with an annual price increase of 69%.
