With 29.5% year-on-year inflation in June, the target set with the IMF has already been exceeded – 18/07/2018

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Inflation exceeded 29% from one year to the next according to data published by the INDEC Tuesday reached 29.5% – and, with this figure, the staff IMF is able to discuss the political response with the government as recalled the consultant Ecolatina

The national CPI climbed 3.7% in June and has marked a significant acceleration compared to May, where it had risen by 2.1%. With these figures, it is accumulating an increase of 16% so far this year (well above the 11.8% recorded in the same period of 2017). In addition, the price increase of the last twelve months climbed to 29.5% in June, which implies the highest record since March 2017 .

Dollar and rate: there was no uncertainty, the IMF "With this cumulative year, IMF staff is already able to discuss the political response with the Bank Central: the rise in prices should not exceed 29% in the accumulated of the last twelve months to avoid this <strong> This dynamic could still tighten monetary policy </strong> (rise in the interest rate), which <strong> would affect the activity </strong> and it would extend the problems already in force in the normal fulfillment of the chain of payments, "warns the consultant. </p>
<p> The agreement with the Fund has <strong> two limits </strong> regarding inflation. "The inflation outlook will be a critical part of every revision in the agreement" with the fund, says the memorandum signed by the government with the l 39; "The BCRA will discuss with Fund staff the appropriate political response operated if the 12-month CPI inflation rate exceeds the limit, "he says. The limit for June was 29. As September and December. If it were to pbad on the 32, directly "the authorities will carry out <strong> a consultation with the IMF Executive Board </strong> on their proposal for a policy response before disbursement of the agreement is available." </p>
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For food and transportation, inflation in June was 3.7%

According to Ecolatina, if inflation closed in July at 2.5% monthly (optimistic outlook), the rise in prices should average 2.1% monthly in the remainder of 2018 to avoid having to go to the IMF Board of Administration (what would happen if the annual cumulation exceeded 32%). This dynamic would imply a deceleration of 0.4 percentage points compared to the first half average. "Although this objective is not impossible to attain, any further sudden change in the exchange rate or a sharp increase in public service tariffs, would jeopardize the agreement ."

The consultant estimates that year-on-year inflation will end in 2018 around 31.5%. "Therefore, although the interim target set in the IMF's standby loan (27%) is exceeded, its maximum level would not be reached – albeit for a few tenths (32%)." Beyond this end of the year [auspicieux] in terms of inflation, we project that in 2019 the government will have to actually go to the Executive Council of the multilateral agency since this year's inflation probably exceeds the limit of 21%.

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With 29.5% year-on-year inflation in June, the target set with the IMF has already been exceeded – 18/07/2018

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With 29.5% year-on-year inflation in June, the target set with the IMF has already been exceeded – 18/07/2018

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