May inflation averaged 5.4 percent and in the first 5 months of the year it already accumulates 30.4 percent, according to the measurement of the Institute of Workers Statistics (IET) of the Metropolitan University (UMET) and the Center for Coordination and Development (CCD) released this Thursday.
In the last 12 months, the rise in prices has reached an average of 62 percent, the highest year-on-year figure since 1991. However, the report warns that if the increases stabilize for the remainder of the year at an average monthly 5 percent, the year would close with an annual inflation of 83.5 percent.
The IET report reveals that seven out of ten chapters of the basket registered increases greater than 5 percent per month in May. The most pronounced rises occurred in “Other goods and services” (+8.6 percent), due to marked increases in cigarettes and hygiene and toiletries products, such as baby diapers and toilet paper. In second place, “Health” climbed 6.6 percent, largely due to increases in prepaid.
The document also highlights that “the high-frequency data of recent weeks -which allow food inflation to be monitored on a daily basis- show that the slowdown in prices occurred between the end of April and the beginning of May, and that in the second such fortnight of May slowdown seems to have stopped in the range of 5 percent per month.
“Food and drinks”, the item with the greatest weight in the basket, climbed 5.4 percent in May. For IET analysts “beyond this slight slowdown, year-on-year inflation in this chapter continues to be well above average (72.5 percent, that is, 10.5 percentage points above the basket average)” .
The document reveals that “within Food and Beverages, the most pronounced increases on a year-on-year basis occurred in bread and cereals (+95.8 percent), infusions (+86.7), oils and fats (+85.4) and alcoholic beverages (+80.2 percent). Only fruit had moderate increases (+29.8 percent). Meanwhile, meats became more expensive 64 percent in the last twelve months, above the average for inflation, but below the average for food.
The IET report analyzes different inflation scenarios for the remainder of 2022. “Today it is almost a fact that 2022 It will be the most inflationary year since 1991; so that this does not happen, the monthly average inflation in the remainder of the year should be less than 2.5 percent, something that seems unlikely given the high inertia that exists and the slow deceleration of recent weeks”, the report highlights. .
For the EIT Coordinator General, Mariano Miguel, “the positive outlook values a new slowdown in monthly inflation. The refusal accounts for its slowness and that at this rate 2022 will be the year with the highest inflation since 1991. Closing the year with 70 percent inflation is not an optimistic scenario, although it is not the most pessimistic either.
The same look is highlighted in the document that warns that “in a pessimistic scenario, in which inflation stabilizes at 5 percent per month, 2022 would end with a price rise of 83.5 percent. In an intermediate scenario, where inflation slows to a range of 4 percent per month, inflation in 2022 would end at 71.6 percent. For 2022 inflation to end below 70 percent, in the next seven months the monthly price increase should not exceed 3.8 percent.
“Hopefully, the IMF’s favorable review will help add calm to the exchange rate and through it strengthen a more solid anchor for prices,” said the director general of the CCD and former Minister of Education of the Nation, Nicholas Trotta when talking about the inflationary outlook. Expanding on his analysis of the current situation, Trotta described that “the slowdown in May against April is welcome, but it does not significantly alter the present and future inflationary scenario. And in this context the economic recovery can be put in check”.