Inflation rose slightly to a 4.2 percent in August, the INDEC national statistics bureau reported Wednesday, dashing government hopes of a continuing deceleration.
Prices have increased by 94.8 percent since the turn of the year and by 236.7 percent over the last 12 months, said INDEC.
August’s hikes were led by housing, utilities and fuels, which rose seven percent, followed by education at 6.6 percent.
Owing mostly to increases in the cost of bus and train fares, transport was third with 5.1 percent, ahead of communications (4.9 percent), restaurants and hotels (4.8 percent) and household equipment and maintenance (4.3) percent, which were all above average.
At the other end of the scale, clothing and footwear rose only 2.1 percent.
Price hikes were higher in the Northwest and Patagonia (5 percent and 4.6 percent) than anywhere else. Food and non-alcoholic beverages saw the highest rises in all regions – except in the Greater Buenos Aires region (GBA) – with increases of 3.6 percent.
Most private analysts had forecast a rate of monthly 3.9 percent for August, just one tenth of a point lower than July’s figure, while government officials had spoken of a round four percent.
Nevertheless, the figure – 0.2 points higher than the preceding month – underlines that the era of runaway price hikes in Argentina is over and boosts President Javier Milei’s narrative that his government has inflation under control.
The August rate matched data published by the Buenos Aires City government last week. It showed inflation of 4.2 percent, almost one point down on the 5.1 percent recorded in July in the capital.
Services rose 4.9 percent in the month, with goods up 3.1 percent in the capital. The cost of transport fares and public services increased the most, with food and beverages rising 3.1 percent.
Expectations for September
Economy Minister Luis Caputo, speaking before the release of the national data, had predicted a rate of around four percent while speculating that September’s rate would lower even more due to a 10-percent reduction in the so-called ‘PAIS tax’ import tariff announced earlier this month.
"I guess it will be close to the July level, hopefully a little lower, but it will be in that environment, I guess," he said in a radio interview.
"I think that in September it will go down, one because of the PAIS tax, two because we are taking more measures, some that we will announce and that will contribute to lowering costs," he said.
"This decline will continue. Argentina is a country that no longer issues more pesos, it is not an overheated economy … the conditions are in place for inflation to continue falling," Caputo forecast bullishly.
The most recent REM survey of market expectations, tracked by the Central Bank, predicts that September’s inflation will slow to 3.5 percent. Economists and experts quizzed for the poll forecast an annual rate for 2024 of 122.9 percent.
Caputo and Milei want to lower inflation to a monthly two-percent, equal to the ‘crawling peg’ rate of devaluation, even if it comes at the cost of sacrificing Central Bank reserves to narrow the gap between the official and Argentina’s multitude of other exchange rates.
Thus far, the minister has managed to tame Argentina’s multiple exchange rates, but has been unable to lower price hikes to below four percent a month.
Earlier this week, Finance Secretary Pablo Quirno said that the Milei administration had “cleaned up the Central Bank, the fiscal numbers, the commercial debt, and all of this has led to a very rapid reduction in inflation.”
Speaking at a seminar organised by a chamber of insurers, Quirno complained that the “inflation expectations of analysts were 50 points away from reality in the first six months.”
New methodology
Earlier this week, INDEC chief Marco Lavagna confirmed that the national statistics provider would be introducing a new method for measuring inflation that will increase the number of products surveyed in the bureau’s consumer price index (CPI).
"We are in the final tests. We have to be very careful about when we make the changes so that this is well understood," the economist said in a radio interview.
The methodology includes a change in the structure of the sample and in the weighting of the goods and services included, following an update of the National Household Expenditure Survey (ENGHO).
Since 2004, the index has surveyed 320,000 prices at 16,700 businesses. "With the new methodology, the surveys will cover 500,000 prices at 24,000 informants,” according to Lavagna.
– TIMES/NA/PERFIL
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