MercoPress. South Atlantic News Agency

Indec says Argentina's CPI in June reached 4.6%

In this scenario, the “blue” dollar hit a new all-time high

The Consumer Price Index (CPI) reached 4.6% last month in Argentina for a year-on-year 271.5%, according to a National Institute of Statistics and Census (Indec) survey released Friday. These figures also yielded a 79.8% increase in the first semester of 2024.

When President Javier Milei took office in December of 2023, monthly inflation reached 25.5% following a sharp devaluation that fueled prices, significantly affecting the livelihoods of middle-class Argentines. After that, the CPI started a downward trend, amounting to 20.6% in January, 13.2% in February, 11% in March, 8.8% in April, and 4.2% in May.

Economy Minister Luis Toto Caputo had predicted June's figures would be below 5% but above May's data. In this scenario, local analysts fear a U-turn given a rebound in the “blue” (a euphemism for “black market”) exchange rate between the Argentine peso and the US dollar coupled with other not-quite-favorable indexes. The Economy Ministry also said that core inflation, which excludes regulated and seasonal components, was 3.7%, for an interannual variation of 271.5%.

Housing, water, electricity, gas, and other fuels went up 14.3% in June, followed by Restaurants and hotels (6.3%) and Education (5.7%). The two divisions with the lowest variations were Alcoholic beverages and tobacco (2.1%) and Household equipment and maintenance (2.3%). Already in July, food and beverages went up an additional 1.8%, according to a private study, probably driven by formal employees collecting their half-year bonuses, thus enlarging the number of pesos in circulation.

According to consulting firms participating in the Central Bank's monthly REM projection, July's inflation will again pierce the 5% floor, with a 4.8% foreseen for July, 4.7% for August, 4.6% for September, and 4.5% for October. As per the average calculations of the top 10 REM forecasters in the December release, cumulative inflation between December and June was 59 points lower than expected.

However, the “blue” dollar reached a historical peak on Friday of AR$ 1,500 after an AR$ 130 increase in July alone (9.5%) and AR$ 35 from Thursday (2.6%) for an exchange gap of over 60% with the official quotation of around AR$ 919.5.