Government Points Out Inflation Slowing Down Quicker Than Market Anticipated

Government Points Out Inflation Slowing Down Quicker Than Market Anticipated

The National Institute of Statistics and Censuses (INDEC) has revealed that the inflation rate for January was at a substantial 20.6%. This information is being hailed by the Government, as it indicates a five percentage point decrease from the December figure, showcasing a significant slowdown. Furthermore, the figure is lower than those predicted by private consultancy firms.

Following the release of the January index, the first complete set under the management of Javier Milei, the Ministry of Economy has stated that the 20.6% inflation rate validates the ongoing deceleration that has been noticeable since mid-December. They further noted that this deceleration is occurring faster than what was anticipated by market predictions.

In relation to this, it was reiterated that the median of the predictions from the Market Expectation Survey (REM), conducted by the Central Bank, was estimated at 21.9% last month.

The REM is responsible for closely monitoring the main short and medium term macroeconomic forecasts of differing work groups. For the January report, the Central Bank of Argentina took into consideration forecasts from 37 participants, including 24 local and international consultancy firms, research centers, and 13 Argentine financial entities.

The Ministry of Economy, overseen by Luis Caputo, noted that the January inflation figure still contains high statistical data from December due to the inherited monetary policy and the honesty of relative prices in the first week of the current administration.

Furthermore, Caputo’s ministry detailed that the transfer to devaluation prices in December was significantly less than the spike in the exchange rate seen in August of the previous year.

They highlighted that while the real exchange rate improvement was consumed in less than two months, inflation between December and January was 51%, relative to the nominal increase in the reference exchange rate of 129%.

They continued to explain that this situation occurred despite the fact that as of December, other prices that were delayed significantly, such as fuels or mass consumption products under controlled price schemes, were left honest.

The economy reaffirms that the program initiated by the government of Javier Milei intends to maintain and amplify this disinflation scenario.

They assured that the combination of fiscal, monetary, and exchange anchor, along with normalization in foreign trade, will ensure a decreasing inflationary trajectory.

Lastly, they expressed that for the Argentine economy to embark on a virtuous path of real salary growth and the generation of quality employment, macroeconomic stabilization, based on financial balance and honesty of relative prices, is a prerequisite.