Itaú BBA - ARGENTINA – Inflation continued to drop gradually in June

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ARGENTINA – Inflation continued to drop gradually in June

julio 16, 2019

Moderate disinflation will likely continue in July

Appreciation of the ARS and freezing of some regulated prices supported disinflation. Consumer prices rose by 2.7% mom from May, posting the third consecutive decline. The figure was slightly above the Bloomberg market consensus forecast (2.6%). The annualized measure of the last three months consequently decelerated to 43.7% (from 55.2% in May), while the annual reading decelerated to 55.8% after five consecutive gains. 

Core item prices also decelerated. Core inflation came in at 2.7% mom, also posting the third consecutive drop. Food prices rose 2.6% mom, slightly below the headline figure. At the margin, the core reading is running at an annualized 46.4% (last three months), down from 57.6% in May. The last-twelve-month inflation reading fell to 56.7%, from 58.9% in the previous month. Regulated prices rose 2.8% mom, led by hikes in gas prices (the last before the decision to freeze tariffs for the rest of the year) but marking the lowest reading of the year. 

Moderate disinflation will likely continue in July. The consulting firm Elypsis, which tracks consumer prices, estimates a new sequential reduction in headline inflation (to 2.3% mom). If this estimate is correct, the three-month annualized reading will fall below 40% for the first time since May 2018. Our forecast for inflation stands at 40% for December 2019.

Juan Carlos Barboza
Diego Ciongo

 



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