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ECONOMY | 15-07-2021 17:27

Inflation in Argentina slows for third month to below forecast

From a year ago, inflation reached 50.2%, the highest annual rate since early 2020, according to government data.

Inflation slowed in Argentina for the third straight month, cooling more than economists had forecast as the government aims to ease price increases before midterm elections.

Consumer prices rose 3.2 percent in June, just under economists’ estimates for a 3.3 percent increase. From a year ago, inflation reached 50.2 percent, the highest since early 2020, according to government data published Thursday.

Economists noted that core inflation was above the headline figure at 3.6 percent, suggesting prices have plenty of momentum despite a myriad of government controls.

“High inflation remains one of the key macroeconomic challenges facing the government, and a significant political liability for the government coalition,” Alberto Ramos, head of Latin America research at Goldmans Sachs Group Inc, wrote in a research note Thursday.

With a primary vote coming up in September, policy makers have stepped up their unorthodox efforts to cool inflation, one of the main sources of discontent by the electorate. Officials announced new capital controls over the weekend to curtail the volume of bonds trading at the country’s parallel exchange rate. The new measures come on top of price controls, currency restrictions and a slower crawling peg on the official rate.

Argentina has now recorded its ninth straight month of inflation above three percent. Economists anticipate inflation will end this year at 48 percent, well above the government’s 29 percent target.

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by Patrick Gillespie, Bloomberg

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