by Solange Rial

Following the news that the July inflation rate was 6.3%, according to the National Institute for Statistics and Census (INDEC), all eyes are now set on what will happen with the August inflation rate. Last month’s picture is now very old, since it was before the primaries (PASO) were topped by presidential candidate Javier Milei from La Libertad Avanza, and the Central Bank (BCRA) hadn’t yet made the decision of devaluating the country’s currency by 22%, locking the official exchange rate until October.  

Eight consultant agencies have projected the August inflation rate will be between 10% and 15%. LCG believes it could be between 12% and 15%, while Econometría is evaluating the rate to be 11%, a number shared by Ferreres and Eco Go. According to Equilibra firm, the Consumer Price Index (IPC) could be between 11% and 12%.

Sources in the Romano Group also say it could be close to 10%. Off the record, a source from another consultant said they are projecting a measurement of 14.3%, although they believe it is too early to measure August yet. Sources in C&T preferred not to reveal any data but anticipated it will be a double-digit number. 

“We expect a strong acceleration,” said Lautaro Moschet, an economist at the Libertad y Progreso Foundation. “The rise of taxes on the dollar in late July meant an acceleration in the early days of the month that was then reflected mainly on food and non-alcoholic beverages.”

He added that “the 22% devaluation of the official wholesale exchange rate kicked off a new dynamic in the evolution of prices, setting a new impulse. As if that wasn’t enough, the rise of regulated prices will also put pressure on the August inflation rate. Considering all this, we expect the next figure will be around 9.3%.”

“In a country with high inflation rates, yesterday’s 22% devaluation will quickly transfer to prices. Thus, the estimate for the August inflation rate will be between 10% and 14%,” said Daniel Adler, a specialist in Financial Training and Entrepreneurship. “Yesterday and today we are seeing three or four price hikes that take place on the same day with several products, as it used to happen in 1989 with hyperinflation.” 

“Sadly, this evaluation of the official exchange rate puts us into a new inflation regime of a monthly 10% inflation for the second semester,” said Alfredo Romano, head of the economic consulting firm Romano Group.

In turn, Walter Morales, president and strategist of Wise Capital, said that “the 22% exchange rate adjustment will cause an inflation of the products in the basic basket of goods, with food prices at the top”.  

According to their calculations, the inflation rate which showed a minimum base of 6/7% per month will accelerate but another 6/7%. “It’s possible that we get an inflation rate of 13% in the next 30 calendar days,” he said.  

According to sources from C&T, “partial data from August is showing that inflation is accelerating significantly, and this will intensify due to the devaluation of the official dollar rate, the continuous rise of the financial and informal dollar rates, and the uncertainty caused by this scenario, probably resulting in double-digit figures.”  

Originally published in Ambito.com / Translated by Agustín Mango