June inflation was 6% according to the National Institute for Statistics and Census (INDEC, its Spanish acronym), a 1.8% drop compared to last month’s index — it’s the third month in a row the index dropped and is the lowest monthly figure since February.
Year-on-year inflation hit 115.6% and the total inflation for the first half of the year was 50.7%, according to the report published today.
Food and non-alcoholic drinks had the biggest influence on the index with a 4.1% monthly increase. The price hikes had the most impact due to the category’s weight on the index and were driven by increased bread, cereals, dairy products, and eggs, according to the INDEC.
The “communications” category, which groups internet and phone services, saw the biggest increase with a 10.5% hike. It was followed by “healthcare” with an 8.6% jump driven by higher prices of medication and medical bills, then by “housing, utilities and fuels,” which had an 8.1% increase due to increased electricity bills.
“More than numbers and percentages”
The monthly inflation was 1.3 points lower than expected by most of the private sector. The Central Bank’s Market Expectations Survey (REM), which averages forecasts from different consulting agencies and banks, predicted a 7.3% average inflation for June and 142.4% for the entire year.
Inflation is a running topic in this year’s campaign, and members of opposition parties demanded stronger politics against the price increase.
“Economy Minister Sergio Massa: listen to the people instead of trying to cover up reality,” presidential hopeful Patricia Bullrich tweeted, referring to the government’s audit on her NGO, which is accused of being a front to finance her political campaign. “Dedicate yourself to fight inflation, which is already 115.6% in the last year. Stop running a smear campaign.”
Buenos Aires City Mayor Horacio Rodríguez Larreta, who is Bullrich’s rival in the upcoming primaries for the opposition coalition Juntos por el Cambio (JxC), also chimed in.
“Inflation is much more than numbers and percentages, it is the anguish you feel when you cannot make ends meet,” he said. “While in the rest of Latin America inflation is less than 15% per year, this government has already taken us to 115.6% in the last year. This is not enough.”
In a report published last week, consulting firm Ecolatina calculated a 7.2% inflation rate for June in Greater Buenos Aires. Despite this month’s slowdown, they are not expecting a broader deceleration. For the rest of 2023, they forecast monthly inflation to average above seven percent, with the inter-annual figure hitting at least 130% for the year as a whole.
Inflation will probably remain unstable due to “the absence of anchors, the distortion of relative prices, and the lack of confidence to coordinate expectations amidst the uncertainty of the electoral transition,” they said in the report.
They added that the government has no margin to resort to the standard pre-election deflation toolkit such as freezing utility tariffs or slowing the rate of the devaluation against the U.S. dollar, mainly due to international reserve scarcity and the program they agreed with the International Monetary Fund (IMF).