Consumer prices rose by an eye popping 7.7% mom in March (from 6.6% in February), beating market expectations of 7.0% according to the central bank survey. Inflation accelerated for a fourth consecutive month, driving annualized quarterly inflation to 120.0% in 1Q23, from 88.4% in 4Q22. The 12-month inflation reading came in at 104.3%.
Core inflation hit 7.2% in March (down from 7.7% in February), led by food and beverages. Annualized core inflation jumped to 119.0% in the quarter ended in March, from 84.0% in December. Prices for regulated items rose by 8.3% mom and 97.1% yoy, led by adjustments in school tuitions. Prices for seasonal products rose by 9.3% mom and 127.3% yoy.
Inflation expectations have become unanchored due to loose fiscal and monetary policies and despite the large, expected contraction in activity. We recently raised our inflation forecast for this year to 110% from 100%, based on our expectation of a marked acceleration in 1Q23. We expect another increase in the Leliq rate (currently at 78%) at the upcoming central bank meeting.
Juan Carlos Barboza
Diego Ciongo