Sunday , January 17 2021

They warn that the impact of the depreciation in August will be felt by next April

This was stated by Ficonomics in its latest report, which states this accumulated inflation for the 12 months after the end of August could reach 46%, a value that would be consistent with annual inflation of 2019, close to 30%.

Macri and inflation.mp4

While the expected annual inflation for the 12 months following the May-June event is also in line with inflation for 2019 about 30%.

Sent, the consultant found that in 2018 there had been two different devaluation events. First, in May and June, with an increase of 36.5%In July and almost all of August there was a period of instability with rising inflation.

The second, in the last week of August, saw another very important event, which obviously had an inflationary impact in September, October and (as calculated) November, detailed in a Ficonomics report.

Inflation Macri Conference.mp4

"The August event looks surprisingly inflationary, even in comparison with others with an equivalent magnitude such as December 2015, or the same is observed in May – June," he said.

And he said,Inflation for the month following the devaluation was 6.5%, well above 4.1% observed in January 2016, or 3.5% observed in June 2018."The most reasonable explanation for this phenomenon may be the unexpected event – a rationale that is reinforced when we compare it to what happened in January 2014, which was also a surprise for the economy as a whole."

In both cases, next month's inflation is just under 20% of the devaluation, and at 3 months it has already accrued about 50% of it.

INSTAGRAM Macri inflacion.MOV

In the four analyzed cases (the 2014 episode and the 2015/2016 episode were also taken into account), the rise in prices after depreciation was "not the same," as obviously there are other variables that can also provide or limit inflation after the devaluation event.

By the way, the consultant mentions the inflationary momentum, the amount of money in circulation and the rigidity of relative prices, especially regulated prices, as determining factors. "For example, all these mitigating factors have helped significantly reduce the" Pass Through "(PT) since the devaluation in 2002, perhaps the most successful measure solely on Argentina's inflationary conditions," they said.

The analysis shows that, on average, specific impairment is transferred at prices over the next eight months, and its effect during the first 3 months varies between 35% and 50%, depending on the counter-measures taken and, basically, whether this is an expected event or not. The less the event is expected, the faster "Pass Through" appears.

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