Argentina: This week the Government will announce a new decrease for September and a further slowdown is expected for October

This Thursday, the INDEC will announce the index of september inflation which according to the forecasts of private consulting firms will pierce the 4% barrier and will approach a 3% floor, the lowest in the last three years.

According to economists, Last month’s index will mark an increase of between 3.2% and 3.8%. And the downward trend would continue in October, according to forecasts. The analysts consulted by the Central Bank for its Market Expectations Survey (REM) estimated that in September inflation would have been 3.5% and projected 3.4% for October.

The slowdown is due in part to the reduction of 10 points of the COUNTRY Tax on the importation of goods and freight, which the Government ordered at the beginning of September and impacted imported products. However, the most important reason in the process is the sharp decline in demand.

In August, the last official record, inflation had been 4,2%monthly and had reached 94.8% in the accumulated of the year and 236.7% in the interannual variation.

According to the forecasts of the JP Morgan bank, in addition to the positive influence of the PAIS tax, it will also impact the deceleration of regulated prices. The entity estimated a reduction to 3.7% of core inflation.

According to the Freedom Foundation the September increase will be 3,2%which implies a slowdown of 1 percentage point compared to August. When analyzing the monthly behavior, the Foundation also highlighted the exchange rate stability and the core inflation which stood at 3.4%, slowing down again compared to the August measurement.

Eugenio Mari, chief economist of that entity, mentions that “the fiscal surplus is essential to continue lowering inflation and for the price level to approach the speed of the crawling-peg 2% monthly. This, in turn, allows salaries to recover in real terms and poverty rates to begin to decline after the inflationary flash in December,” he noted.

From the Equilibra consultancyMeanwhile, based on their surveys of 130,000 prices, they estimated that in September the General Level CPI rose 3.5% and the Core CPI 3.4%.

According to the economist Eco Go, Rocío Bisangthe September data closed for the consulting firm in 3,5%, largely because, after three months of growth, food dynamics resumed the downward trend. Inflation in this area was 3.4%, 0.8 points below what was recorded the previous month. Although the first two weeks saw slight variations -0.4% and 0.7%-, at the end of the month food regained momentum, with increases of 1.1% and 1%. ​

According to the consulting firm run by economist Marina Dal Poggetto, food consumed within the home showed an increase of 3.4%, while those consumed outside marked an increase of 3.6%. Thus, in the last 12 months they accumulate increases of 234% and 207.1% respectively and leave a drag for the month of October of 1.6 points.

The consulting firm LCG, which measures food prices in supermarkets weekly, warns that the first week of October closed with a price increase of 0.2% in food and beverages. This implies a slowdown of 0.2 percentage points compared to the previous week. In addition, the consulting firm pointed out that the average monthly increase was 2.3% and in the end-to-end measurement at 1.5% in the last 4 weeks.

“Las Bread and Fruit drops partially offset the increase in Meats and Drinks, categories of high relative weight, and in Vegetablesfor seasonal reasons. The percentage of products with increases was drastically reduced: about 10 points in one week,” he highlighted.

Regarding the evolution of prices during this month, most analysts They agree that the downward pace will continue, among other things, because also Minimal reductions in utility rates are expected. According to Bisang, “for October we are projecting inflation ofl 3,1%, according to preliminary data.

For its part, the Libertad Foundation expects that the October CPI will be around the 3%. “With this, it would maintain its downward trend, motivated by exchange rate stability, which led tradable goods to converge towards a rate of 2% monthly.” their analysts explained.