After the dissemination of the data inflation of 25.5% in Decemberthe highest since 1991, the market predicted a 25% price increase for January and an increase in the total cost of living of 213% by 2024.
This follows from the last Survey of Market Expectations (REM) published monthly by Central Bank of the Argentine Republic (BCRA)based on the analysis and projections of 37 participants, including consulting firms, local and international research centers and financial entities in Argentina.
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Inflation: the market does not foresee a drop in January
“In the last survey of the year 2023, analysts estimated a monthly inflation of 25% for January 2024 and an inflation for the year of 213% year-on-year. (21.2 pp more than in the previous month) Regarding the Core CPI, and the REM participants placed their forecasts for 2024 at 243.4% yoy,” reads the BCRA report.
The analysts’ forecasts occur in a situation of strong acceleration in prices: between November and December 2023 the Consumer Price Index (CPI) grew twice as much, going from 12.7% to 25.5%. At the same time, the inflationary dynamics of last year stood at 211.4%, more than doubling the 94.8% of 2022.
In this sense, the consultant LCG anticipated that the increase in regulated fuels, added to the increases in public transportation and prepaid They impose a 15% inflation floor in January. “Although a slowdown may be seen compared to December, We expect a high record also for this month, around 25%“they predicted.
And they noted: “After a turbulent December in terms of increases, the first two weeks of the year close with a weekly average inflation of 4.1%, but decelerating. This represents returning to the pace of increases in November. Despite the slowdown weekly, the average inflation in the last 4 weeks amounts to 32%”.
From the perspective of this macroeconomic analysis center, without heterodox policies as a complement to the program implemented by the Minister of Economy Luis Caputo, “Inflationary escalation could delay or nullify the entire program“.
From C&T They identified tourism as one of the great drivers of inflation this month “along with the 40% increase in prepaid and 50% adjustment in public transportation in the Greater Buenos Aires (GBA) region”.
“On the contrary, numerous components with free prices significantly moderated their rate of increase since the fourth week of December, especially including food. Inflation for the entire month could be around 20%, one step below that of December“, they detailed.
Production, unemployment and dollar: market projections for 2024
On the other hand, the specialists consulted by the Central projected for 2024 a level of real Gross Domestic Product (GDP) 2.6% lower than the 2023 average, worsening the outlook by 0.2 pp compared to the previous survey. “This deterioration was concentrated in the first quarter, a period for which participants reduced their forecast by 0.9 pp,” the analysis details.
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At the same time, the consultants predicted a unemployment rate open of 6.6% for the fourth quarter of 2023 and 7.5% for the first three months of the current year. Specifically, experts predict a drop in employment of 0.9 pp between now and March.
Regarding the evolution of the exchange rate, the REM participants conceived a nominal official dollar at $820.3 on average for January. This is in line with the goal of the Javier Milei government of devalue at a monthly rate of 2%.
Regarding foreign trade in goods, those participating in the official survey estimated that by 2024, exports (FOB) will total USD 83,952 million and imports (CIF) USD 69,372 million, which would imply a trade surplus of USD 14.58 billion for a strong recovery of the agroindustrial sector.
Finally, the projection of the primary fiscal surplus of the National Non-Financial Public Sector (SPNF) was located at $666.4 billion, in contrast to the deficit of $928.9 billion expected in the previous month’s survey.
MFN