Argentina’s consumer prices rose 1.3 percent in May, according to the government’s statistics agency, Indec. The figure comes as long awaited good news for the Macri administration, being that it’s half of last month’s rate and allows the Casa Rosada to send out the message that inflation is under control.
However, unless next months’ numbers are astronomically low — for Argentine standards, that is — it is still quite unlikely the government will manage to meet its goal of keeping the rate under 17 percent. Five months into 2017, the accumulated inflation is of 10.5 percent.
That means that on average, every month’s rate from here until the end of the year should be under one percent. And that is still a complicated number to achieve and, more importantly sustain over time, especially because the government intends to continue removing subsidies in utilities, something that plays an important role in driving prices up.
In fact, analysts indicate that the government seems to have taken into account the real impact of these increases, considering that this week it announced it would provide even more subsidies to the public transportation network to prevent fares from going up. However, this doesn’t mean the government will halt every possible increase to achieve this particular goal. There are increases in utility bills scheduled throughout the year that won’t be touched.
Another piece of good news for the economic team is the fact that the so-called “core inflation” also went down. It clocked in at 2.3 percent in March, 1.8 percent in April and 1.6 percent in May. The core inflation follows the evolution of the prices of almost 70 percent of the goods and services that make the Indec’s basket of goods — which determines the poverty line — whose prices are not determined by the government and don’t vary depending on the season.
According to Indec’s stats, the main sectors that pushed the inflation rate higher last month were home supplies (3 percent), education (1.8 percent), medical attention (1.5 percent) and food and beverages (1.2 percent).