Fynsa
Not that we were expecting much news, but I know that, secretly, all the authorities and those of us who follow the numbers, wanted inflation to come out lower. That it would surprise, even a little bit, on the downside, and that this whole inflationary spiral would start to take a breather.
This was not the case.
The August CPI rose 1.2% from the previous month, which, for a change, was above our expectations and whatever version of market expectations the reader likes. Thus, the price index accumulates an increase of 14.1% in twelve months. 14.1% in twelve months, the highestthe highest variation in the last... thirty years. Although almost all divisions show significant increases, it is Food and Transportation are those that stand out the most, with increases of 21.7% and 27.8%, respectively. Exchange rate depreciation, rising international food and energy prices, along with global logistical difficulties have been behind the most recent price increases, which, together with local factors associated with the consumption boom of last year and the beginning of this one, formed a toxic cocktail that has been more difficult to combat than previously thought.
To make matters worse, the situation should not improve in the coming months. In my heart I hope I am deeply mistaken, but it is difficult not to consider the evidence. September is a seasonally inflationary month, a product of the national holiday celebrations, concentrating precisely in the divisions that have been hit the hardest. Despite the above, thanks to some respite provided by the price of oil, the estimated variation does not exceed the actual figure for August, with projections slightly above 1.1%. projections slightly above 1.0%.. Then, October, a month that for some years and with greater strength since the change of basket in 2019, has also shown high seasonality. The effects of the second round and the exchange rate transfer would still play their part, so we should not be too hopeful.
Therefore, the key months would be November and December. Not only are these months with low seasonalities, but we could also begin to see more direct effects of an oil price that (we hope) will not continue to escalate, lower pressures from the exchange rate and a slowdown in activity that would already be impacting the possibility of passing costs to final prices. In fact, whether they are higher or lower, the market, the Central Bank and we estimate that these months will show lower inflation levels than those seen at least since March.. These signals will be vital, not to shore up projections at the end of the year, but to slowly start to moderate those towards 2023. The Central Bank and we are on that side of the fence, the market still needs evidence to believe. We shall see.
