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What does the market expect for prices in February?


February 15, 2024 – 11:56

Analysts believe that most of the rise in food prices occurred in December.

Reuters

After meeting the January inflation datamonth that showed a consumer price index (CPI) of 20.6%analysts believe that February cost of living will be below 15%. There are doubts about what could happen to the dollar and the services that remain to be adjusted.

The economist Paula Gándara, from Adcap Grupo Financieropointed out that “the January inflation figure of 20.6% was in line with expectations“, while “the core component decreases to 20.2%, from 28.3% in December.”

“However, those regulated rose in January to 26.6%, from 20.7% in December. The market has been discounting the slowdown in inflation since mid-January, when high-frequency indicators began to be published below expectations. Today, expectations are around 15% for February and 10% for March,” says Gándara.

Inflation: what’s coming for February

What can you expect in February? the Center for Argentine Political Economy (CEPA) asks in a report. Analyzing item by item it is possible to identify that:

  • In Food and drinks: In the first days of February the increases moderated significantly. In the second week, the increase increased.
  • Dollar: it would be maintained with a crawling peg of only 2%. Doubts appear regarding the exchange appreciation derived from the differential with the CPI. Will there be a new devaluation before the start of the liquidation of the coarse harvest?
  • Regulated – water, electricity, gas rates: The Government announced the removal of subsidies, between January and April. The increase in a gas bill, for example, of $5,000 could reach $20,000 in three installments. In the case of electricity, it determined increases since February for N1 and for businesses and industries.
  • Regulated – Prepaid/Medicines: The deregulation involved sending updated prepaid installments of around 29% in February and 21% in March. Medicines did not increase their price in the first days of February.
  • Regulated – transportation, gasoline and tolls: At the beginning of February, bus and train fares were increased by around 250% in the metropolitan region. In the rest of the country there were increases of the same amount that will intensify with the announcement of the elimination of the Interior Compensation Fund. Additionally, in February a 6.4% gasoline adjustment was applied – corresponding to the 2022 freeze – and three increases of 4.4% (each) are expected in March, April and May, corresponding to the update of the tax freeze. during 2023. In addition, in May/June the update corresponding to the first quarter of 2024 should be applied, which would affect a new increase in gasoline of close to 20%. All this regardless of the increase in gasoline due to the fluctuations of the dollar and the international price.
  • Rentals: The application of the DNU (deregulates the market) resulted in an additional jump to inflation of the order of 50% to 100% for those who have to renew the rent.





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