Itaú BBA - ARGENTINA – A small respite for inflation in November

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ARGENTINA – A small respite for inflation in November

December 15, 2020

Lower-than-expected headline inflation does not brighten the cloudy horizon

Headline inflation posted a lower-than-expected increase in November, following the October spike. The CPI rose by 3.2% mom in November, from 3.8% in October. Inflation was below expectations (3.6%) according to the latest central bank survey. The 12-month inflation reading dropped to 35.8% in November, from 37.2% in October. Despite the positive surprise, annualized quarterly inflation increased to 47.3% in the quarter ended in November, from 44.5% in October. 

Record-high monthly core inflation. Core item prices jumped by 3.9% mom, from an increase of 3.5% in October. The core inflation reading rose to 46.5% (annualized) in the quarter ended in November, from 41.5% in the previous month. Prices for seasonal products (which also include seasonal apparel) increased by 2.0% mom in November and 111.7% annualized in the quarter ended in the same month. Prices for regulated items (mostly frozen) rose by 1.2% mom and 16.8% annualized in the quarter ended in November. 

Lower-than-expected headline inflation does not brighten the cloudy horizon. Inflation at the margin continued to accelerate, particularly on core items, despite frozen utility tariffs and exchange rate controls. The expansion of the monetary base to finance the fiscal deficit, uncertainties surrounding the evolution of the exchange rate, and likely utility tariff adjustments next year have led us to maintain our inflation forecast for 2021 at 50%, up from an estimated 37% for this year.

Juan Carlos Barboza
Diego Ciongo



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