He food price accelerated in the first week of December and complicates the government’s plans to get out of the trapgiven that one of the explicit conditions is that is located in the 2.5% zone for at least three months.
Two measurements by private consulting companies reported that main food products rose more than 1%while for a third it detected a fall.
An analysis by the consulting firm Eco Go indicated that the rise in prices that had occurred at the end of November was maintained at the start of the last month of the year and rose 1.1%.
“With this data and considering a projected increase for the coming weeks of 0.5% -in line with the average of previous weeks-, inflation in food consumed within the home would rise to 3.5% in December. Incorporating the increases recorded in food consumed outside the home (2.3% projected for the month), the indicator rises to 3.3%,” the work added.
as the study progressed, Eco Go estimated that adding the other variables that make up the indicator, December inflation will rise to 3.2%.
However, the consultant added that “The data is still preliminary and is subject to change.. The seasonality of festivals and summer vacations drives prices upward,with notable increases in meat (if they are excluded from the measurement,inflation would reach 2.5%) and items linked to tourism.”
“Additionally, they stand outincreases in prepaid bills, cell phones, electricity, electricity and water rates and private schoolsamong others,” he said.
For its part,LCG published its work for the same period and detected a 1% increase in food prices.
“The average monthly increase was 2.6% and in the end-to-end measurement it was 3.3% in the last 4 weeks”the report detailed.
The products with the greatest increase were beverages (5.6%), dairy products and eggs (4%), oils (0.7%) and meats (0.5%).
Unlike these two works, the consulting firm Econviews published its survey that showed a deflation in the prices of essential products of 0.3%. The difference can be explained by the different dates on which each statistic and the baskets considered were closed, in addition to their weighting. as the weeks go by, they are expected to balance out.
If what these first evaluations of the month anticipate are confirmed, The government would find an obstacle in its intention to lower the devaluation rate to force prices to fall even further..
After knowing the 2.7% of October, the president Javier milei He announced that if it is maintained for three months (that is, December and January) in the order of 2.5% or below, will lower the crawling peg to 1% to reduce what he calls “induced inflation.”
This plan would already go into review starting tomorrow when the National Institute of Statistics and Censuses (INDEC) publish the November result. The average of the consulting firms that published their reports in the REM of the Central bank estimate it closer to 3% than 2.5%.
Despite this, The monetary authority reduced the reference interest rate from 35 to 32%under the assumption that inflation will continue to decline. This measure is also linked to a new tender that the Ministry of Finance will carry out this Wednesday in which it will seek to renew maturities for $6 billion.
Prices in dollars
The government is advancing regulations that Give consumers the freedom to make payments in pesos or any other currencywhich would be the beginning of what Milei explains as the “endogenous dollarization”.
This possibility was raised as the authorization of the WAX beads used for laundering, but it has not yet been put into practice, since on the one hand an adaptation of the collection and payment systems is needed so that the use of each account is indistinct, and in addition it is indeed necessary to change some resolutions of the secretariat of Trade, which would be known in the coming days.
The intended outcome is that the use of the dollarr –as it is indeed the favorite currency of Argentines- and in this way induce a dollarization with “bills” that are already in the hands of the people.
What are the main drivers of food price inflation according to economic experts?
Interview between Time.news Editor adn Economic Expert on Food Price Inflation
Time.news Editor (TNE): Welcome to Time.news! Today we’re diving into the pressing issue of food price inflation and its implications on the economy. Joining us is Dr. Sofia Martinez, a leading economist and consultant at Eco Go. Thank you for being here, Dr.Martinez.
Dr. Sofia Martinez (SM): Thank you for having me! It’s a pleasure to discuss such an important topic.
TNE: Let’s start with the most recent data. We’ve seen food prices accelerate in early December, complicating government plans to maintain inflation within the 2.5% target. What are the key factors driving this rise?
SM: Absolutely, it’s a pivotal moment. The private consulting firm Eco Go has reported a 1.1% increase in food prices at the outset of December. Factors contributing to this include seasonal demand spikes due to the holiday season and summer vacations, which typically drive prices up, particularly for meat and other festive items.
TNE: It’s captivating that while some measurements indicate an increase in food prices, others show a decline. How can we reconcile these differing reports?
SM: Great question! It reflects the complexity of the market. Different consulting firms may use varied methodologies to measure price changes. As an example, while Eco Go noted a 1.1% rise, another agency detected a fall. This discrepancy can arise from regional variations, sample sizes, or even timing. The overall trend, however, suggests an upward movement, particularly with a projected inflation of 3.5% for food consumed at home.
TNE: What implications do you foresee if inflation rises to 3.2% in December, as you indicated? How does that fit into the broader economic landscape?
SM: If inflation does reach 3.2%, it poses a critically important challenge for economic policymakers. The government has explicitly stated that maintaining inflation in the 2.5% zone for at least three months is crucial for recovery. Surpassing this target could hinder economic stability and prompt them to implement austerity measures, which might stifle growth.
TNE: You mentioned seasonality and its effects on pricing. Could you elaborate on how this seasonal variance is influencing the inflation figures we’re seeing?
SM: Certainly. Seasonality plays a huge role, particularly in food pricing. The festive season typically leads to higher demand, which drives up prices. In regions marked by heavy tourism, we see spikes in the prices of food and other services during summer vacations.Our analysis suggested that if meats were excluded from the equation, the inflation reading could sink to 2.5%, highlighting the sensitivity of these metrics to seasonal products.
TNE: What can consumers expect moving forward,especially with projections suggesting further price increases?
SM: Consumers may need to brace for ongoing price pressure,especially in relation to food and utility costs. We’re predicting a 0.5% rise in food prices over the coming weeks alongside increases in prepaid bills and essential services. This could affect household budgets significantly as salaries may not keep pace with rising costs.
TNE: given these dynamics, what recommendations would you provide to policymakers aiming to mitigate the impact of inflation on citizens?
SM: Policymakers need to consider a multifaceted approach. Strategies could include targeted subsidies for essential goods, enhancing local agricultural production to reduce reliance on imports, and better regulating utility price increases. Moreover, clear communication about economic conditions can help manage public expectations and maintain consumer confidence.
TNE: Thank you, Dr. Martinez,for your insights into this complex issue. As consumers and policymakers navigate these challenging waters, it’s vital to stay informed.
SM: Thank you for having me. It’s crucial that we continue to engage in productive discussions about our economy.