Argentina’s Central Bank forecast monthly inflation to accelerate slightly in December on seasonal effects but that won’t derail a disinflation process expected for the country during early 2023, a top policymaker said.
November monthly inflation data, due on Thursday, should show price gains of close to five percent, down from 6.3 percent in October, sustaining the Central Bank’s strategy to hold its benchmark rate at 75 percent, according to the official, who asked not to be named discussing internal scenarios.
Private economists expect Argentina to post 5.9 percent inflation for November compared to October, according to the median forecast in a Bloomberg survey.
The senior official sees monthly price hikes picking up steam again in December, but remaining below six percent, driven by Argentines spending on the Christmas holiday season and receiving an extra, semi-annual pay cheque. Food prices often get marked up significantly in the last month of the year too.
Inflation is expected to slowly cool again in the early months of 2023, the official added, citing impacts of the government’s short-term price control agreements with food and industrial sectors, high interest rates and an attempt to reduce money printing to finance government spending.
A Central Bank spokesman declined to comment.
Argentina faces one of the highest inflation rates in the world, with annual price increases expected to reach 100 percent by the end of the year. The government’s fiscal deficit remains a chronic issue with international credit markets shut off to the crisis-prone economy after a default in 2020.
The Central Bank has increased its key rate from 38 percent a year ago to 75 percent in September, keeping it unchanged since then as it sees the monthly inflation data slowing.
Argentina’s currency strategy came under the spotlight last weekend after President Alberto Fernández said in an interview with a local newspaper he wanted to close the gap between Argentina’s multiple exchange rates. The Central Vank official ruled out an abrupt devaluation and said any currency strategy would be gradual to prevent inflation from spiking further.
by Patrick Gillespie & Ignacio Olivera Doll, Bloomberg