The first month of the Javier Milei government is, much like his predecessor’s final ones in office, dominated by unstoppable price increases.
Following the 118 percent devaluation announced by the La Libertad Avanza government’s Economy Minister Luis Caputo, inflation has only intensified. Analysts and consultancy firms have accordingly corrected their estimates, with some placing this month’s inflation above 30 percent.
Such is the case of ABECEB, the consultancy firm directed by the economist Dante Sica, Production and Labour minister during the Mauricio Macri 2015-2019 government, which forecasts inflation of 31.2 percent this month. Not far behind at around 29 percent are the projections of Analytica, the consultancy directed by the economist Ricardo Delgado.
Slightly lower are the evaluations of Eco Go, the firm directed by Marina Dal Poggetto, whose estimate of 28.2 percent is nevertheless more than three points above the 25 percent of the previous week. The firm further revealed that food and beverages rose 8.2 percent in the first week of the month and 10.4 percent in the second, attributed "mainly to the effect of a devaluation slightly higher than expected on prices with some items increasing by up to 90 percent in one week, as well as the updating of fuel prices, which had an indirect impact on all the other prices."
At the same time the above factors, plus the beginning of summer holidays, pushed up the categories "tourist accommodation" and "air fares," which registered increases of 47.3 and 90.3 percent respectively.
Eco Go further detailed that "medicaments also registered major increases after the devaluation, especially psychotropic medication which went up 44.7 percent, " revealing that "in the previous week prices were already going up, driven by the end of the price freeze," the firm said in a report cited by the Clarín newspaper.
The estimates of Ecolatina are in the 25 percent range. Their report reflects that "after 12.7 percent [inflation] registered in November, prices in Greater Buenos Aires again accelerated and in the first half of December registered an increase of 18.1 percent against the same period in the previous month."
The most recent survey put together by the consultancy firm shows that "the increase in the first fortnight of December was mainly driven by the items health, where medicaments and prepaid health schemes were the outstanding increases, (38.4 percent), leisure (35.2 percent) and domestic appliances (28.2 percent) while food and beverages climbed 16.2 percent."
Inflation at the start of 2024?
The next question is how much of 2023’s price increases will carry over into the new year.
In this sense the projections vary. According to United States investment bank JPMorgan, "the measures announced seem aligned with the basic scenario" as they see it, projecting from there the expectation of "inflation in general accelerating, accumulating somewhat over 60 percent between December and January."
Continuing with estimates at the international level, the Focus Economics consultancy agrees that the early La Libertad Avanza government’s measures "are conducive to increased prices and a steep economic contraction in the next two quarters" with a projection of annual inflation to 260 percent in mid-2024, 145 percent above the same point this year, 115 percent according to the data of the INDEC national statistics bureau.
In dialogue with Canal E, the economist Eduardo Lahoz assured that the start of next year "will be complicated," estimating "a floor of around 200 percent with an inflation of some 120 points accumulated for the first half of 2024."
– TIMES/PERFIL
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