Itaú BBA - ARGENTINA – inflation slowed in november, but by less than expected

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ARGENTINA – inflation slowed in november, but by less than expected

December 13, 2018

Inflation deceleration was less evident in the core measure

Monthly inflation decelerated in November, from the previous months, but by less than expected. Consumer prices rose 3.2%, above the 2.8% Bloomberg consensus forecast, but well below the 5.4% MoM and 6.5% MoM rises registered in October and September, respectively. Annual inflation rose to 48.5% in November (up from 45.9% in October), but the annualized three-month measure decelerated to 80.0% in the month (from 85.1% in October). Consumer prices rose 43.9% during the first eleven months of the year.

Inflation deceleration was less evident in the core measure. Core item prices rose 3.3% MoM (down from 4.5% in October), led by food and non-alcoholic beverages (3.4%). Annual core inflation came in at 46.2%, while the annualized three-month measure remained almost flat from the previous month, at 82.7%. The persistently high core measure indicates that the pass-through continued to affect consumer prices in November.

Regulated prices decelerated markedly from previous months. These prices rose 2.8% MoM and 63.2% YoY (6.1% MoM in average during the last three months), led by increases in tobacco, gasoline and health services. The price of items affected by seasonality rose 3.0% MoM and 33.8% YoY, also showing a deceleration at the margin (4.0% in average between August and October), led by fruits, vegetables and clothing.   

We expect some disinflation in December. Price-tracker consulting firm Elypsis estimates a 2.2% MoM increase in consumer prices for the last month of the year, due to a lower statistical carry-over from November and a minor incidence of regulated prices. Besides this, the central bank reinforced its commitment to a tight monetary policy introducing downward adjustments to the December monetary aggregate target. We forecast inflation will hit 48% this year. 

Juan Carlos Barboza
Diego Ciongo

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