Inflation slowed to 2.5% in August, but still expected to clear 48% in 2021

Argentina’s Consumer Price Index (CPI) rose 2.5 percent in August, the INDEC national statistics bureau reported Thursday, once again highlighting the country’s continued struggle against inflation.

Prices have increased 32.3 percent so far in 2021, according to official data, and by 51.4 percent over the last 12 months – one of the highest inflation rates in the world.

Nevertheless, August’s rise from the previous month was still the lowest recorded monthly rate since 1.9 percent in July 2020, when Argentina was under a strict lockdown to tackle the spread of Covid-19. Last month’s rate is the first time since September 2020 that inflation has not topped three percent.

In a statement the Economy Ministry highlighted that since a peak of 4.8 percent in March, inflation “has now been falling for five consecutive months."

Experts warned this week that they still expect price increases to reach close to 50 percent this calendar year. 

According to the most recent Central Bank survey, which consults more than 42 sources across markets, analysts forecast a rate of 48.4 percent at present, exceeding the government’s initial forecast of 29 percent. The same poll had forecast a rate of 2.8 percent for August.

Education, healthcare

Price increases in August were led by education and healthcare, both recording hikes of 4.2 percent. They were followed by recreation and culture (3.7 percent) and clothing (3.4 percent), the latter being attributed to the change in season.

Increases in food and beverages, which have risen sharply in recent months, fell sharply from 3.4 percent in July to 1.5 percent in August.

Inside the Palacio de Hacienda, officials are pleased that regulated prices slowed to a 1.1 percent rises in August, "the lowest value in the last 12 months," while "seasonal ones strongly decelerated to 0.6 percent, against 4.9% in July."

According to the Central Bank poll, inflation is forecast to reach 2.7 percent in September and October, and 2.8 percent in November, accelerating in December to above three percent.

Argentina's economy is slowly emerging from the recession it entered in 2018. The Central Bank predicts that gross domestic product will rise 7.2 percent this year, a welcome return to activity after a 9.9 percent decline registered in 2020, in large part due to the economic shutdown imposed amid the coronavirus pandemic.

– TIMES/AFP/PERFIL