The INDEC national statistics bureau revealed Wednesday that its Consumer Price Index (CPI) recorded a 3.4 percent increase last month. The news is a boost to the government, six months before October’s elections.
It’s the first deceleration in the pace of inflation this year, coming in lower than rates in March (4.7 percent) and February (3.8 percent), but higher than January (2.9 percent).
In the first four months of the year, inflation has reached 15.6 percent. Prices have increased by 55.8 percent in the last 12 months.
The figure was lower than the expectations of most analysts, most of whom predicted four percent and comes after the government reversed course last month by halting unpopular austerity measures that caused prices to soar on public transport, electricity, water and gas bills. It also brokered agreements with businesses to freeze prices on mobile phone bills and 64 food and drink items. The measures, justified by officials as assistance to Argentines who have suffered a brutal recession for two years, came just six months before the general election, in which the president will seek re-election.
Central Bank Governor Guido Sandleris said Wednesday that April inflation represented “a significant drop” from the previous month and that he expects inflation to continue to slow. Sandleris has tightened monetary policy four times since mid-March as part of attempts to tame inflation.
“The economic forces that reduce inflation are already showing results,” Sandleris said. “We have a strict monetary policy and we’re recovering basic macroeconomic stability.”
Argentina was rolling back subsidies on utilities and transportation as part of a deal for a record US$56-billion credit line with the International Monetary Fund. Officials at the Fund admit that inflation has proven harder to tame than initially expected when the two sides brokered a deal last June.
Inflation is also becoming a barometer of Macri’s ability to win a second term in office. As prices have climbed in recent months, his approval ratings have dipped to the lowest levels of his presidency. Several polls show inflation is voters’ top concern this year.
“April’s inflation, while still higher than desirable, should provide some relief to policy-makers, after a long streak of upward inflation surprises,” economist Construction at Ezeiza International Airport Adriana Dupita, told Bloomberg this week.
Some analysts said they saw April’s number as a sign of things to come. May’s inflation could be around three percent, according to Adrian Yarde Buller, head of research at Buenos Aires-based broker Grupo SBS. He forecasts 42 percent inflation for 2019.
“We expect the next quarters to
show lower levels of inflation,”
Yarde Buller wrote in a note following the inflation data.