Argentine Inflation Slows to Lowest in Three Years, Elypsis Saysby
Consumer prices rose 1% between July 11 and Aug. 14: Elypsis
Stronger-than-expected slowdown gives more space to cut rates
Argentine central bank President Federico Sturzenegger’s “obsession” with reining in inflation may be starting to pay off, easing pressure on monetary policy, according to the latest measure of consumer prices by Elypsis.
Prices rose 1 percent in the four weeks to Aug. 14, the slowest pace since the consultancy began publishing its own index in 2013, Director Luciano Cohan said in a phone interview. Cohan said he expects inflation to rebound a little in the last two weeks of August to close at 1.5 percent to 1.7 percent for the month.
Prices have soared in Argentina after the new government of President Mauricio Macri devalued the peso by about 30 percent and reduced subsidies on utility bills, causing some prices to rise as much as 500 percent. The faster-than-expected deceleration will allow the central bank to cut interest rates more aggressively after it raised them to as high as 38 percent in March and April, Cohan said.
“The intensity of deceleration we’ve seen in the past month is very strong,” Cohan said. “It’s a bit early to call it a trend, but it’s good news.”
The results show that the economy has absorbed December’s devaluation and the rise in energy tariffs. The jump in prices has contributed to weaker growth, with the economy contracting 0.7 percent in the first quarter from the previous three months. Cohan said he now expects the government to increase spending to kick-start the flagging economy.