Itaú BBA - ARGENTINA – Inflation in-line with expectations in September

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ARGENTINA – Inflation in-line with expectations in September

October 14, 2020

Core inflation slowed in September.

Headline inflation matched expectations in September. The CPI increased by 2.8% mom in September, from 2.7% in August. Inflation was slightly above the Bloomberg consensus estimate of 2.7%. Annualized quarterly inflation increased to 34.2% in 3Q20, from 23.1% in the previous quarter. However, 12-month inflation fell to 36.6%, from 42.8% in June.

Core inflation slowed in September.Core item prices jumped by 2.3% mom in September, from an increase of 3.0% in August. The core inflation reading increased to 36.3% (annualized) in 3Q20, from 25.0% in 2Q20. Prices for food items rose by 3.0%, although driven by seasonal products (fruits and vegetables). Prices for seasonal products (which also include seasonal apparel) increased by 7.9% mom in September and 64.4% annualized in 3Q20. Regulated prices rose by 1.9% mom and 14.5% annualized in the quarter ended in September, following another adjustment of fuel prices. The government maintained the price freeze on telecommunication services (cable TV, internet and mobile) as well as energy and transportation tariffs.

Following the easing of social distancing measures in 3Q20, inflation increased relative to 2Q20, but was curbed by controls on exchange rate and consumer prices (including utilities). We forecast 37% inflation for 2020, down from 53.8% in 2019. We note that inflation could increase more gradually than expected if the central bank maintains the current pace of exchange rate adjustment. Currently analysts surveyed by the central bank expect consumer prices to increase by 50.6% over the next 12 months. 


Juan Carlos Barboza
Diego Ciongo


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