Inflation in June was 3.7%, the highest number in the last two years

The effect of the exchange rate and the devaluation had one of their most visible faces in the June monthly inflation, which had a variation of 3.7%, as reported today by the


Indec
. This is the worst measure since May 2016 (25 months ago). In addition, an annual inflation rate of 29.9% has been recorded and, exceeding 29%, the IMF will conduct a monetary policy badysis.

Underlying inflation (does not take into account regulated and seasonal prices) 4.1%, still higher than the general price index. This measure is the highest since December 2015, when the exchange rate was unified.

"Underlying inflation rose more than the general rate because it further increased the price of unregulated goods.The impact was the exchange rate jump and not the same. Rate increases, "said Martin Alfie, chief economist at Radar Consultora.

According to the INDEC, the major increases occurred in the transportation (5.9%), food and non-alcoholic (5.2%), health (4, 3%) and household equipment and maintenance (4%).

On the other hand, the first six months of the year resulted in a cumulative inflation of 16%. %, while year-on-year inflation rose to 29.9%, higher than the internal target of 29% higher
that the government was in agreement with the IMF. In the memorandum, an annual CPI range of 27% (lower target) and two higher targets of 29% and 32% had been set.

"Exceeding the upper limit of the internal range (29%), the IMF badyzes its current monetary policy, but if the upper bound external band (32%) is exceeded, the Fund will send the agreement to a revision, and the government will have to explain to the council of the organization its management of monetary regulation., in turn, will condition the agreed disbursements, "said Gabriel Caamaño, partner of Estudio Ledesma.

"The most worrying fact is that the food, which in general lives a lot of the exchange rate, is quite straightforward.Foods are a reflection of the jump type because they have a negotiable component (they are exported), so "When we see the bands imposed by the IMF of inflation, and with the figure of 29.5% YoY, we do not respect the lower band (which C is 29% .) We have already started to explain to the Fund, "added the economist.

Meanwhile, during the semester, the major increases were in transportation (22%), communication (20, 4%), education (20.2%), food and soft drinks (17.3%) and housing, water, electricity, gas and other fuels (16.1%).

"The government lost all control over the issue of inflation, although I do not know if at any time they had it. The exchange rate hits in a difficult economic context, recession If we did not have such high rates, the transfer to prices would be even higher. This will be maintained. Maybe July will go down a bit, but it will continue around 3% and makes any economic planning in Argentina very difficult, "said financial badyst Christian Buteler.

The government had planned that the # Last month's inflation was going to be between 3.5% and 4%, produces – in addition to the race – the fuel increases (due to the depreciation and rise in the international price of oil) and the increase in food (oils, bread and meat), added to the rise of transports.