It speeds up hand in hand with the food and for the year they already see it at 45%

Inflation in December closed at around 4% according to the consultants’ forecast. If this is confirmed, it will become the highest of the year. This leaves a significant brake for 2021: for analysts, the price index will evolve between 45% and 55%. There will be three keys that will define the year that begins: the dollar, rates and wages.

With 4% in December, inflation in 2020 will be 36%, far from 53% in 2019. The Central Bank noted the fall in inflation as one of the achievements of this first year of administration.

In the report they published a few days ago, they stress that the pandemic has required “an unprecedented level of emissions”. At the same time “was done a great sterilization effort intended to absorb excess liquidity. “This policy, as well as other instruments”achieved an inflation reduction of almost 20 points compared to 2019 “.

The point of view of private economists is more critical. “The situation is delicate. We are entering a high inflation scenario without an anti-inflation plan“, says Guido Lorenzo, director of LCG.

LCG’s projection is that December inflation will be 4%. “Our food and beverage survey gives us over 4%. It leaves a significant drag for January. For this first month of the year, we are forecasting 3.7% with an average of 4% for the first quarter. “

“Without exchange rate missteps, our base scenario, with a rate adjustment, is 55% end-to-end inflation in December“Lorenzo said.

For this year, the finance law provides for inflation of 29%. “It’s ridiculously low, there is no analyst who can defend this number currently,” insists LCG. The Central Bank Market Expectations Survey (REM) puts it at 50% in December 2021.

“The economy is sailing with inflation between 3% and 4% per month. It’s a raised floorwhereas this time it does not come from an adjustment of the dollar; if not better than that acts as an anchor and devaluation expectations are on the rise. “

For Lorenzo, one of the complications that inflation will add in 2021 are all price adjustments that have been delayed in 2020: energy, transport, wages, fuels, regulated / trampled services in the context of the pandemic and the second-round effects that these increases generate because of their weight in the value chain. “Amen that the exchange rate situation does not strongly contaminate prices”, he mentions.

According to Ecolatina, Matías Rajnerman estimates an inflation of 3.7% for December. “The month of December is particularly high for fruit and vegetables and for meat. We see a raised floor of 3.5% in the first quarter. For the whole of 2021 we are in the 45% zone, almost 10 percentage points more than this year. “

“The start of this year is going to be fueled by tensions that have been postponed from 2020,” Rajnerman says. In this sense, what happens with the rates is essential. For this economist, there will be no increase in the first quarter. But warn that “well beyond april they can’t leave because afterwards you already have the elections and at the same time continue to increase spending through subsidies is also difficult. “

For Rajnerman, the other problem that will put pressure on prices is that of wages. “In 2020, joint ventures have been limited by the pandemic, but there will be revisions at the beginning of 2021. There must be some sort of recomposition and that it will add pressure“.

“In December, we’re around 4% or a bit more. There were typical increases at the end of the year, those related to vacations, increases in domestic workers, plus the effect of the increase in fuel, metro and prepaid, ”he says Camilo Tiscornia of C&T Consultores. “Core inflation -cleanliness of regulated prices and seasonal effect- hasn’t stopped climbing since august“.

By 2021, Tiscornia estimates core inflation of 43%, “with the government controlling prices and tightening everything so that it does not escape.” But a 50% forecast, “doesn’t sound crazy to me. Our estimate is conservative and fits into a macro scenario with government intervention, perhaps delaying rate adjustments, with the same stuff from the past.” .

Tiscornia adds another factor to the dollar that will influence the course of inflation. “They will try to prevent the exchange rate from rising so much in 2021This is what they do historically during the election year. “

On a related note, from the Cohen Group, they warn that while projections for this year suggest 50% inflation, “the projections are expected to change based on what happens on the foreign exchange market “.

“Around the first trimester, it is expected a price increase of 12.3% This will be determined by monetary dynamics and the expectations of the various prices, which depend on economic policy, ”they underline.

QA