August will provide the first monthly inflation data since Sergio Massa’s debut as economy minister and many consultancy firms and analysts are warning that it will have a floor of at least six percent.
The government needs to see a deceleration of the consumer price index, which is already forecast to reach around 90 percent this year, according to the most recent Central Bank survey of market expectations. However, food prices are continuing to rise with several products having already recorded annual increases of more than 100 percent.
According to a recent retail price survey by the EcoGo consultancy firm, headed by economist Marina dal Poggetto, inflation in August is estimated to reach 6.7 percent.
"Regulated products drove the month’s general indicator with increases in prepayments of 11.34 percent, schools in PBA [Buenos Aires Province] nine percent, train and bus fares in the AMBA [Buenos Aires Metropolitan Area] 40 percent and fuel rose by an average of 8.5 percent," the report said.
President Alberto Fernandez said last week that Argentina’s struggles with inflation "is a problem that has been going on for decades" and was not born with his government. Nevertheless his administration will have to redouble its efforts to appease the inflationary dynamic that has been reaching maximum levels for several years and is on the verge of topping three digits per year.
In this regard, the Universidad Austral's IEM survey noted that inflationary expectations are already running close to 100% for 2022. "In order to impact expectations, it will be crucial that the economic agenda should be based on the communication of a macroeconomic stabilisation programme with attainable monthly targets and reallocation of fiscal spending," it wrote.
Massa seems to be aiming in this direction with the cuts in ministries. Last week, he welcomed representatives of food, beverage and personal care companies to his offices, with the "aim of bringing order to the table of Argentines."
For EcoGo, the third week of the month recorded a variation of 1.6 percent in food prices compared to the previous week. "With this data and considering a projected weekly variation of 1.4 percent for the last week of the month, the inflation of food consumed in the home in August would climb to 5.7 percent," the report said.
Meanwhile, Consumidores Libres reported that the price of the 21 products in the so-called "basic food basket" rose by 2.9 percent during the first two weeks of August. It was driven by grocery products, which rose by an average of 4.5 per cent, followed by meats for a total of 2.5 percent, and all fruit and vegetables by 0.6 percent in the first half of the month.
However, a survey conducted by political analyst Héctor Polino indicates that the price of some products have already risen by over 100 percent so far this year: sugar 109.5 percent, wheat flour 105.8 percent, carrots 113.5 percent, onions 155.5 percent, chard 105.5 percent and eggs 100 percent. It is worth noting that Argentina’s INDEC national statistics bureau found that the consumer price index had risen 46.2 percent from January to July.
Juan José Llach, professor emeritus of the IAE Business School, underlined the changing international economic context.
Llach pointed out that "the global context is helping Argentina, for now, fundamentally because of the price of grains and also with fuels if Vaca Muerta were working," he said.
In this sense, he stressed that "to take advantage of these opportunities, our country would have to have a clear and sensible course and sufficiently solid political agreements which, unfortunately, are still a long way off, but may become apparent in 2023."