Inflation in March will approach 7% and compliance with the Government’s objectives is complicated

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The data of 6.6% inflation in February released by INDEC generated very bad news for the fulfillment of the Government’s objectives, but in addition to the figures for the second month of the year, analysts expect the Consumer Price Index (CPI) to be even higher in March and be located in 7%.

In February, the comparison of the same month with the previous year marked a 102.5%, the highest year-on-year figure since 1991. In this way, the Price Index (CPI) that relieves the statistical body accumulated in the first two months of the year a variation of 13.1%.

In this sense, the division with the highest increase in the month was “Food and non-alcoholic beverages”, which reported a rise of 9.8%, mainly due to the incidence of the increase in “Meat and derivatives” and “Milk, dairy products and eggs.

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The figures not only hit the pockets of Argentines, but also make the government’s plans difficult. The Minister of Economy, Sergio Massa, had assured that he would seek to have a figure in April “with the three ahead” and that -as established in the Budget- inflation would close the year at 60%. In the Palacio de Hacienda they do not openly acknowledge that they will not meet those goals, but they begin to dilute the weight of those projections.

What will happen to March inflation

This inflationary dynamic is far from stopping, according to private estimates. According to the consultant LCGfor the first week of March, food averaged a rise of 6.4% and to this item we must add the increases in regulated products, such as fuel, prepaid, transport and education.

“Although the application of price agreements can moderate the increases in gondolas, we understand that inflationary dynamics have not yet fully relaxed. Indeed, wholesale inflation continues at a rate slightly above 6% per month (101% annualized). A high inertiatogether with an electoral calendar plagued with challenges (such as managing the exchange rate gap in a context of drought), could threaten to revive expectations and price remarks”, he analyzed. LCG.

In this sense, Matías de Luca, an economist at that consultancy, added that March is usually a month where the demand for money begins to fall and that drives inflation up. “When there is a lot of inflation, people want to get rid of their money because they know that it depreciates., so instead of having it, take advantage and go to the supermarket, buy clothes before it increases. That is, it increases the speed of circulation of money, ”he indicated to TN.

Besides this, in Ecolatina, where they also foresee inflation of 7% per month, add another factor that will put pressure on prices in the third month of the year. “Added to an inflationary inertia difficult to disarm in the short term without resorting to a stabilization plan and a crawling peg close to 6% per month, in March the impact of different punctual increases will be combined”, such as schools, prepaid, rates and fuel, pointed out Santiago Manoukian.

Also read: From the war against inflation to the triple digit figure: the long road of escalating prices

For seasonal reasons, in March there is usually a price pressure driven by the “Education” sector, since classes begin, and by the clothing item. “We see inflation close to 7% for March. One of the main items is ‘Education’ due to the start of the school year, but particularly this year there is a carryover of food and beverages, such as meat, chicken, dairy products, eggs,” said Lorenzo Sigaut, from balances.

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