Itaú BBA - ARGENTINA – Monthly inflation picked up

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ARGENTINA – Monthly inflation picked up

Abril 15, 2020

The rise in headline inflation was driven by food and education services.

The rise in headline inflation was driven by food and education services. The CPI increased by 3.3% mom in March, from 2.0% mom in February and 2.3% in January. Even so, annualized inflation decelerated to 35.2% in 1Q20, from 37.1% in February. Annual inflation fell to 48.3% in March, from 50.3% in February.

Core inflation also acceletated in March. Core item prices rose by 3.1% mom, up from 2.4% in February, led by meat prices (affected by supply restrictions at the end of the month, as the government began to implement measures to control the spread of COVID-19). The core inflation reading decreased to 36.8% (annualized) in 1Q20, from 40% in February. Regulated prices rose by 3.3% mom, mostly fueled by adjustments in education services and tuitions. Energy, fuel and transportation tariffs remained under control, implying an annualized increase of 22.3% in the first three months of the year.  Prices for seasonal products rose by 4.9% mom, as the distribution of vegetables was also affected by the COVID-19 lockdown.

Hard to collect. INDEC will adjust its methodology to measure prices in April to incorporate the effects of the COVID-19 lockdown. Following discussions and recommendations with/from other statistic agencies, INDEC will conduct online and phone surveys to gather price data when possible. In other cases, the evolution of prices will be estimated using reference prices and extrapolations. The price data for food and regulated items is unlikely to be affected. We forecast inflation of 35% for this year, with risks tilted to the upside given that the planned fiscal expansion to deal with the negative effects of the COVID-19 pandemic are likely to be financed by the Central Bank.

Juan Carlos Barboza
Diego Ciongo

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