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INDEC: March inflation clocks in at 2.6%

Economy Minister Axel Kicillof reveals March’s inflation index at a press conference yesterday.
By Fermín Koop
Herald Staff

All areas except education and garments registered a deceleration last month

Prices rose 2.6 percent in March, according to the government’s consumer price index released yesterday that showed a steeper deceleration than expected in prices across the board, with a few seasonal exceptions.

“We observed a deceleration in all areas of the general index, except in two that rose due to seasonal issues,” Economy Minister Axel Kicillof said at a press conference alongside INDEC statistics bureau Director Ana María Edwin. INDEC Technical Director Norberto Itzcovich and Trade Secretary Augusto Costa watched from the first row.

When added to an official inflation rate of 3.7 percent in January and 3.4 percent in February, the government estimates prices have risen 9.8 percent in the first three months of 2014, perilously close to the 10.4 percent estimated for the whole year in the Budget.

The government’s consumer-price index released yesterday showed a deceleration in prices across the board, although the trend of an inflationary economy remained steady as health care costs rose 1.3 percent, transport increased three percent, home supplies, 3.5 percent, food and beverages, 2.4 percent, leisure activities, 0.4 percent and housing, 1.2 percent.

The outliers in which increases were registered included education, which rose 6.2 percent and garments that increased 5.3 percent. The ministry was quick to point to seasonal reasons for the hikes, noting classes started and there was a changeover in seasons.

“The increase in these two sectors take place every year due to the season. Classes have started and that explains the increase in education, while in clothing, prices have risen because of the change of season,” Kicillof said. “We are now seeing a deceleration thanks to the price agreement programme.”

Monthly inflation was less than what the market expected considering that the median of nine economists surveyed by Bloomberg predicted the INDEC would report inflation at 2.9 percent. Meanwhile, economists surveyed by Reuters predicted inflation would clock in at 2.8 percent.

Kicillof did not hide his satisfaction with the deceleration in price increases, foreshadowing that he expects a similar decline in the current month since reports from the Trade Secretariat already “show that the slowdown has gathered pace in the first two weeks of April.” At the same time, Kicillof criticized inflation reports of economists and opposition members, which he defined as “not rigorous”.

The so-called Congress Inflation Index, which takes an average of the estimates issued by private consultancies, said March inflation was 3.3 percent, pushing inflation in the first quarter of the year to 12.2 percent.

“It’s obvious they are not rigorous but it’s hard to say why because nobody knows how they do their reports and how many stores they visit,” Kicillof said. “I don’t pay attention to their figures but I’m afraid that since they are mentioned by the press they could try to create even higher figures over the next few months.”

The inflation announcement was tinged with drama yesterday as the opposition figure released its monthly figure moments before Kicillof began to speak.

“The inflation reported by the government should be closer to our figures in order to be credible since in the last three months our reports have been more close to reality than theirs,” PRO legislator Federico Sturzenegger said yesterday at a press conference alongside other opposition members.

The opposition members who release the numbers monthly do not reveal which consultancies they use to come up with the figure.

A low figure to come

As March’s inflation was revealed yesterday, economists began immediately thinking about April, with experts from both sides of the aisle largely agreeing the price index will be lower this month and next. Measures taken by the government and the effects of January’s devaluation already absorved were on top of the list of reasons.

“Inflation will definitely drop over the next few months since all the factors that have led to an increase have been controlled. Inflation will not exceed 25 percent this year,” Agustín D’Atellis, economist and member of La Gran Makro, a pro-government group, told the Herald. “The government has taken some right measures such as the price agreement programme but it has to keep on working with the subsidies.” President Cristina Fernández de Kirchner’s administration has launched an effort to cut back on subsidies from public utilities.

Lorenzo Sigaut Gravina, chief economist at Ecolatina agency, told the Herald yesterday that April’s inflation will clock in at a lower number since the effects of January’s devaluation have passed, but said the figure won’t be lower than two percent.

“April is traditionally a calmer month regarding prices and inflation will be lower. The effects of the devaluation will have passed and price hikes could only be seen due to Easter holidays,” Sigaut Gravina said. “We see a deceleration of inflation, which had reached four percent monthly. Nevertheless, it will not drop below two percent.”

@ferminkoop

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