epa08294749 Many people go to supermarkets in search of food and cleaning supplies in the city of Buenos Aires, Argentina 14 March 2020, after the second death in Argentina from Coronavirus was confirmed yesterday. EPA/Juan Ignacio Roncoroni

In July inflation rose 1.9% and for August they expect a floor of 3%. Francisco Mattig explains

Despite the recession and the freezing of rates, inflation in July showed an average rise of 1.9% compared to the previous month. Accumulates 15.8% so far this year and reaches a rise of 42.4% in the last 12 months, as reported yesterday by the National Institute of Statistics and Censuses (INDEC).

The data was in line with the economists’ forecasts. However, it could be the last month with a relatively contained value. Since analysts warn that, in the second semester, the curve could accelerate as the different sectors recover. For now, in August, there is already an inflationary floor of 3%, they warned.

According to data from the statistical agency, the largest increase in the last month was in home equipment and maintenance (3.9%), mainly due to increases observed in electronic equipment and household appliances. Then came recreation and culture (3.3%), clothing and footwear (3.3%), various goods and services (2.3%), health (2.2%) and restaurants and hotels (1, 9%).

On the other hand, below the monthly average were transport (1.8%), alcoholic beverages and tobacco (1.4%), food and non-alcoholic beverages (1.3%), housing, water, electricity, gas and others. fuels (1%), communication (0.7%) and education (0.1%).

When decomposing the indicator for the month, a worrying figure is the 2.5% rise in core inflation, that is, that which does not include seasonal increases. “With a loosening of the exchange rate, a recovery of wages, the unfreezing of prices or a new acceleration of food and beverages like this month, the situation looks out of control”, warns the LCG consultancy.
The items that increased the most

At the same time, the regulated price categories rose 0.5% due to the stability of public service rates, cell phone plans and educational services, among others. And seasonal prices, influenced by the decline in vegetables, tubers and legumes, grew 0.9%.

Sources from the Central Bank (BCRA) indicated that “although it is expected that the readjustment of prices of some services with the reopening of activities will impact the general level in the coming months, the process of convergence to lower inflation levels will continue to consolidate.”

On the other hand, according to LCG, “the low inflationary records are going to be difficult to sustain when progress is made with the unfreezing of fuels and the current rates for gas, energy and transportation.” In this sense, the announcement of the 7% increase in fuel is a sign of the need to begin to decompress the repression of prices in that market, he said.

Francisco Mattig, from Consultatio, explained: “We continue to observe an acceleration of inflation, where we see the possibility of a number in the order of 4% for August, which would seem to be validating with the high-frequency private estimates that we are seeing in the last few weeks, “he said.

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