Tuesday, July 16, 2024

ECONOMY | 07-09-2023 17:06

Inflation in Buenos Aires City reached 10.8% in August

Price increases jump double-digits after devaluation of peso; Hikes total 127.3% over last 12 months; Consultancy firm forecasts 130% inflation nationwide in 2024.

Monthly inflation entered into double-digits in the capital last month amid steep price hikes and the national government’s devaluation of the peso.

Data published by the Buenos Aires City government’s statistics and census directorate reveals that prices rose 10.8 percent in August. Inflation since the turn of the year in the capital stands at 79.8 percent, with prices up 127.3 percent over the last 12 months.

Price variations in the IPCBA index were led by housing, water, electricity, gas and other fuels, which recorded a rise of 13.8 percent and contributed 2.56 points to the overall increase. Significant increases were seen in rent prices, water supply costs and common expenses, said the report.

Food and non-alcoholic beverages averaged a rise of 12.5 percent, pushed higher by sharp increases for meat and meat products (19.2 percent), bread and cereals (10.4 percent) and vegetables and pulses (15.9 percent).

Elsewhere, restaurants and hotels recorded increases of 8.3 percent, mainly as a result of rising prices for prepared food at restaurants, bars and catering establishments. Conversely, falls in hotel accommodation service rates for tourist purposes took the pressure off.

Healthcare (10.8 percent) and transport (9.2 percent) also caught the eye.

Prices have surged over the past month after the government devalued the peso against the dollar by 22 percent in the wake of the August 13 PASO primaries.

The City inflation figure was published just a week before the INDEC national statistics bureau releases its consumer price index (CPI) information. Most analysts expect a figure in double digits, with acceleration seen in hikes well in September.


Annual forecast

News that prices accelerated in the capital last month comes as a top international consultancy firm warns that Argentina will suffer from the highest inflation rate in the world next year.

Focus Economics said in a report that price hikes will reach 130 percent in 2024, surpassing even the 128 percent projection for Venezuela.

The report anticipates that inflation will average out at a lower level this year in most countries, thanks to lower international commodity prices, normalisation of supply chains and more moderate domestic demand. However, it warns that some countries, including Argentina, Colombia, Haiti and Venezuela, will experience significant rises in 2024.

Focus Economics said that a steady devaluation of the currency will continue to drive up prices, with GDP expected to contract by 0.3 percent next year.

The report warns that Argentina will face considerable economic challenges in the coming years, including currency controls, runaway inflation, ineffective economic policies, droughts and extremely high interest rates.



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