there are prices that go down despite 50% annual inflation

In addition to a freeze on food and cleaning prices, there is a drop in some prices, such as car insurance and expenses.

Due to the quarantine, the price system has been totally distorted. So much so that in Argentina that supports inflation close to 50% per year, there are prices that are falling. And that they are rapidly deflating the inflation bubble.

Luciano Cohan, director of the consulting firm Seido, compares the scenario with what happened in mid-2013, when the then super secretary Guillermo Moreno had imposed a tight system of controls that -artificially- had cooled the inflationary process.

Now, in addition to a freeze on food and cleaning prices, there is a drop in some prices. “Auto insurance, school fees and even expenses,” says the economist in dialogue with iProfesional.

For this month, Cohan estimates inflation of 1.5%, one of the lowest monthly rates in several years.

According to measurements by Seido, which monitors online prices in supermarkets, inflation last week was just 0.3%. And the previous one had reached the insignificant 0.1 percent. With which, in the last four weeks, the accumulated gives 1.0 percent.

This rise is basically explained by what happens with food prices. The only relevant sector that is thriving in full quarantine, in the opposite direction of the vast majority of sectors of the economy, which show historical falls. Without going any further, Indec has just measured a decline of 47% in construction and 17% in industry.

“The average monthly change (of inflation) in Food and Beverages was 1.4%,” reports Seido. Still, that record was well below the 2.5% monthly increase measured the previous week.

Meats are the exception. Prices, also there, show a retraction, quite possibly due to the lower consumption in restaurants and other shops that had to close their doors, forced by the pandemic.

“For the fourth time in a row, meat prices registered negative variation (-0.3% s / s vs. -0.7% s / s),” Seido measured. Within this segment, the greatest losses correspond to poultry meat.

In turn, the consultant mentions: Oils and Fats slow down. Its weekly variation was 0.0% s / s (vs. 0.3% s / s). Meanwhile, its average monthly variation was -1.4% m / m (vs. -1.7% m / m). At a disaggregated level, we highlight the variation in Oils (0.0% s / s vs. -0.1% s / s).

  • Baking, Cereals and Pasta accelerate slightly and at low levels. Its weekly variation was 0.2% s / s (vs. 0.1% s / s last week). Meanwhile, its average monthly variation was 0.3% m / m, compared to 0.4% m / m last week. At a disaggregated level, the register of Bakery Products stands out (0.3% s / s vs. 0.2% s / s).
  • Dairy Products and Eggs also accelerate this week. Its weekly variation was 0.5% s / s, compared to 0.3% s / s the previous week. Meanwhile, its average monthly variation was 1.0% m / m, compared to 1.1% m / m last week. At a disaggregated level, the Milk record stands out (0.2% s / s vs. 0.0% s / s).

Anyway, nothing is forever, Cohan warns: “By June 2013, controls relaxed and inflation regained lost ground. We believe this scenario could be repeated later this year, compounded by a possible correction in the rate of official change. “

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Written by Argentina News

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