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How much was the inflation in 2023 and what are the projections for 2024?

The annual variation rate of the Consumer Price Index (CPI) in November it was 160.9% in Argentina, 18.2 points higher than the previous month, and the monthly index reached 12.8%, so the accumulated inflation in the first eleven months of the year was 148.2%. Although the data for December is not yet known, private consultants expect that the month could end with an inflation of between 25% and 30%so the accumulated price increase for all of 2023 would be around 173% and 178%.

“Taking into account that December inflation will be between 23% and 27% and the accumulated interannual figure for November was 160%we can assume that The index for all of 2023 will be around 180%especially due to the pressure that was seen in the first weeks of December,” explains the economist Federico Glustein when justifying these numbers.

In the same sense, the Ecolatina economist, Santiago Manoukiandescribes that “throughout 2023, a marked upward trend in the rate of increase in the general price levelmarking an acceleration from the 95% area in 2022, to touching 210% this year.” Alert that, according to the consulting firm’s estimates, This is the highest level in 32 years.

Prices: why they are so high in December

For Manoukian, in particular, the jump in inflationary dynamics of the last part of the year, which deepened since November, “responded to the dismantling of different agreements and price controls implemented by an exiting government, which was losing police power, and faced with the expectation of a prompt devaluation.” The arrival of a new administration that promoted “free prices” and the sum of the recent devaluation are elements that, according to their view , explain these numbers.

“The measures announced by the government in recent weeks caused a initial inflation shock significant”, points out, for his part, the financial advisor Federico Domínguez. It refers to the fact that, in a few weeks, price controls were ended, the official dollar was devalued from 365 to 820, the interest rate on fixed terms was lowered from 133% to 110%, and the import system was normalized. , a mega decree was sent to deregulate the economy, an “Omnibus Law” with reforms of all kinds, and a fiscal adjustment was announced for more than 5 points of GDP.

All of this generated a sharp jump in prices, but, according to his view, this initial jump will be offset by a gradual decrease in the coming months. “It is likely that January inflation is around 20%, February’s 12% and from March or April we will begin to have single-digit inflation,” anticipates Domínguez. And he is confident that, in the medium term, these measures will cause a supply shock that will contain price increases.

Walter Moralespresident and strategist of Wise Capitalpointed out to Ámbito, for his part, that “the devaluation, the tax increase (2% of GDP) and the elimination of subsidies are going to bring more inflation, which in the first quarter of the year it could be 92%.” He considers that this satos is “something inevitable due to the distortion of relative prices” and anticipates that this inflation will help liquefy public spending and the BCRA debt.

Inflation: what’s coming for 2024

For Domínguez, inflation will start to slow down in January for many reasons. “The first is the increased demand for money, zero emission to finance the treasury and lower remuneration of monetary liabilities. The second is that the recession and fiscal adjustment They will moderate demand, which will reduce price increases. The third factor is that much of the adjustment in food prices occurred during December. The fourth factor is the normalization of import flow“says the analyst.

For its part, the Market Expectations Survey (REM) index carried out by the Central Bank (BCRA) month by month anticipates an inflation of 192% by 2024. And the latest estimate from the Organization for Economic Cooperation and Development (OECD) ) pointed out that the average inflation (not end to end, as reported in Argentina) will go from 124% in 2023 to 157.1% next year.

In its economic outlook report, the organization noted that The upward trend in prices is being driven by currency devaluation and is expected to persist through 2024. by “the gradual elimination of many exchange controls.”

However, other projections are alarming. The British bank EMFI Group, specialized in emerging markets, issued a very serious report on the prospects under the Government of Javier Milei for next year.

“Reducing energy and transport subsidies will fuel inflation, especially in the first half of the year. However, the recession will help partially alleviate some of the pressure on prices. We expect inflation to be 444% by the end of 2024, up from 191% in 2023.”predicted the English entity.

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