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Consultant surprises with data about “core inflation”

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Consultant surprises with data about “core inflation”

Inflation, although still very high, has been slowing in recent months. There was data from April from a private consulting firm that surprised economists about the so-called “core inflation.”

Core inflation (also known as underlying inflation) is an economic indicator that measures the underlying price trend in an economy, excluding the prices of more volatile goods and services. Core inflation does not include regulated prices (that is, rate increases are not included) or items affected by seasonal issues such as tourism.

In other words, core inflation seeks to isolate the impact of transitory or cyclical factors on the general price level, such as:

Seasonal fluctuations in the prices of agricultural products. Tariff adjustments in regulated services (such as electricity or gas). Specific effects of external shocks (such as a sudden increase in the price of oil).

By focusing on the most stable components of the basket of goods and services, core inflation allows central banks and economic analysts to get a better idea of ​​the medium-term direction of inflation in an economy.

Core inflation: what was the data that surprised a consulting firm

It is now practically a fact that the month of April will end with single-digit inflation, not only due to the slowdown in prices in the food and beverage basket; but also due to the drop in sales that forced supermarkets and businesses to have more offers.

The so-called core inflation shows a surprising evolution due to its downward trend.

Core inflation of 0%

According to the consulting firm Alphacast, directed by Luciano Cohan, in the last four weeks it has registered a 0% increase. “It is the lowest since we started measuring high frequency in 2013,” added the economist in X.

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The measurement is not very far from others that track food and drink prices in supermarkets, with increases of just 1% so far this month.

There are 5 days left until the end of April, so there may still be increases in food and drinks.

The general price index showed, for the same consultancy, a deflation of 0.8% in the third week of the month compared to the previous one.

According to estimates, the general index would be around 7.6% this month, a significant drop after the 11.2% in March. The same study reflected price drops in 25% of the products analyzed and half of them with drops greater than 1%, Infobae published.

What about general inflation?

It is estimated that due to the strong rate increase, inflation is closer to 10%, but in single digits. In March the Indec index was 11%.

The collapse in inflation in April would have been much greater if it had not been for the sharp increase in gas, of around 350%. This increase has a direct impact on around 2 points on the index.

There are other sectors that also had increases such as bakeries, restaurants and industrial ovens (due to gas rates transferred to prices).

The strong control of monetary expenses, the loss of purchasing power and the drop in sales are reasons that partly explain the drop in inflation.

Other consulting firms are optimistic about the continuity of the inflationary slowdown, which may possibly occur even more quickly than expected. Even the head of the IMF, Kristalina Georgieva, considered that inflation in Argentina is falling “a little faster” than what the Fund expected for 2024.

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