Itaú BBA - ARGENTINA – Inflation slowdown will not last

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ARGENTINA – Inflation slowdown will not last

agosto 15, 2019

Inflation is likely to resume an upward trend

Consumer prices rose by 2.2% mom from June, posting the fourth consecutive decline. The figure was below the Bloomberg market consensus forecast (2.4%). The annualized measure of the last three months consequently decelerated to 37.1% (from 43.7% in June), while the annual reading slowed to 54.4%. Slowdown in inflation was due to the appreciation of the ARS and freezing of some regulated prices.

Core item prices decelerated even more. Core inflation came in at 2.1% mom, posting the lowest reading since February 2018. Food prices rose 2.3% mom, slightly above the headline figure. At the margin, the core reading reached an annualized 37.0% (last three months), down from 46.4% in June. The last-twelve-month inflation reading fell to 55.1%, from 56.7% in the previous month. Regulated prices rose 1.8% mom, led by hikes in fuels and health insurances, but marking the lowest reading since May 2018. 

Inflation is likely to resume an upward trend. The recent depreciation of the ARS, due to the higher political uncertainly after the adverse result for the government in the primary elections, will likely impact consumer prices strongly over the coming months.


Juan Carlos Barboza
Diego Ciongo

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