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June inflation was 2.7%, the lowest since December – 2019.06.16



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Inflation in June was 2.7%, a result that was shown in line with what analysts and consultants expected. It was the lowest record since December and the third consecutive fall. In July, it expects it to be lower. "Inflation is falling and will continue to decline," the president of the Central Bank said yesterday, Guido Sandleris. "The macroeconomic conditions are given to lower inflation in a sustained way. In July, it will be lower than in June".

The June figure was 0.4 percentage points lower than the May index and two p.p. less than the March index, when a peak of 4.7% was recorded. In what is going to accumulate an increase of 22.4% and 55.8% year-on-year, according to the National Institute for Statistics and Census (INDEC). When analyzing the monthly rise, by sectors, the prices that rose the most, in June compared to the same month last year, Were those of communication (7.1%), recreation and culture (3.7%); health (3.6%) i Equipment and maintenance of the home (3.4%). while the foods, they were increased on average, 2.6%.

According to official data, regulated goods and services had a 2.8% monthly increase, compared to 3.7% in May, affected by gas, water transportation, fuel and prepaid charges.

"In June fell the third (and last) increase quota of gas (Approximately 8%); a more moderate increase of fuels (2%) by reduction of the tax component, and increase in mobile telephony (8%). They all added 0.6 points of inflation, "said the LCG consultant.

while Seasonal goods They increased 2.5% monthly, mainly motorized by a 6% increase in fruits and vegetables.

The impact of inflation, according to geographical regions, showed that the strongest pressure was in Northeast (2.9%) and Northwest (2.8%), While The lowest was in Great Buenos Aires (2.6%). Yesterday, the statistical body of the Federal Capital, reported that the rise in the Buenos Aires area was 2.8%.

Economists explain that this trend towards the slowdown in the inflation index was "key", the stability or the downward trend in the dollar. Although, this movement has been registering since the beginning of May, only in June, the fall of the American currency has averaged 5%. The Government, on the other hand, is betting all its chips to the fact that the dollar does not fire and does not impact on higher inflation.

The Minister of Finance, Nicolás DujovnAnd, he pointed out Friday that he expected June inflation to show "a downward path" and was even excited that "July's is even lower than in June, particularly because this process is led by the loss of core inflation ". Sandleris yesterday ratified this trend.

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Lorenzo Sigaut Gravina, director of Ecolatina, agrees with what Dujovne and Sandleris said. "Inflation will fall for the fourth consecutive month and it would not exceed 2.5% this month. Although the price hike will continue to be high, it would be the lowest since the beginning of the exchange rate run in the middle of last year, "he explained. His forecast is that inflation reaches 40 % in 2019.

Also the LCG consultant handles an inflation projection in December around 40% per year, consistent with an average inflation of 50% per year.

In the future, "new tensions can not be ruled out in the foreign exchange market, but in a context of currency stability and with frozen tariffs, we expect inflation to converge at rates of 2.5% in the second half of the # year, "he noted in his latest report.

"The recomposition of wages in a scenario (economic and political) in which there is not much space to continue compressing margins can add some pressure. But, in any case, the rigidity of the Monetary Program would ensure that the offer Credit does not validate the increase in demand, "he analyzed.

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At the beginning of July, also the analysts who monthly consult the Central Bank (BCRA) for Their market expectations report (REM) stood at 40% its inflation prognosis for the whole year and 27% for 2020.

Although the indicator of inflation is yielding over the previous months, it is still the sword of Damocles for the economy and, in fact, Central economists corrected at # 39; it raises its prognoses.

To this it is added that the International Monetary FundLast month, the economic forecasts for the country worsened. It forecast a contraction of GDP of 1.3% in 2019 and raised its estimate of 32% to 40% inflation.

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