The data that buries Argentina’s “Massa plan”: CABA inflation soared to 7.3% in January 

The Secretariat of Statistics and Census of the Ministry of Treasury and Finance of the Federal Capital of Argentina informed that the CPI had a violent increase of 7.3% in January 2023, marking a strong inflationary acceleration with respect to the 5.8% increase in December last year.

With the prices of the City of Buenos Aires (CABA), the year-on-year inflation reached 99.4%.

It should be noted that, at the national level, year-on-year inflation climbed to 94.8% in December 2022, the highest figure since October 1991.

The fateful inflationary results evidenced in the Federal Capital warn of the resounding failure of the economic program launched by Minister Sergio Massa.

Price controls caused shortages but did not influence medium and long-term inflationary expectations, nor did they generate “reference prices” as intended.

The CABA CPI showed a maximum increase of 12.1% in the information and telecommunications category.

Significant increases were also recorded in the prices of restaurants and hotels (11.6%), transportation (11.1%), recreation and culture (10.3%), insurance and financial services (9.2%), and personal care services (6.6%).

Food and non-alcoholic beverages had a brutal 6.1% increase during January, thus registering a year-on-year inflation level of 103.9% compared to the same period last year.

The fact that food has risen above the general average suggests a real increase in the price of the basic food basket, which has had a significant impact on the measurement of poverty.

The inflation survey in the City of Buenos Aires works as a preview of the variation of prices in the rest of the country.

In the last 6 years, the highest monthly divergence between the CABA CPI and the national CPI reached a maximum of 1.6 percentage points, with which the expectation for the national figure suggests a floor of around 6%.

Most private consulting firms estimate that monthly inflation was above 6% in January, and a recent advance report by Marco Lavagna’s INDEC warns that the variation would have ranged between 5.5% and 6%.

Minister Massa aimed to consolidate an average of 4% monthly inflation during the first 3 months of the year and 3% during the second quarter.

These results will not materialize; without them, the basic guidelines outlined in the 2023 Budget will not be met either.

Massa’s economic plan shows signs of failure only six months after launching in August last year.

The exchange rate gap with the parallel dollar has once again reached 100%, public tariffs will have to be updated faster than in 2022, and inflationary expectations are completely unanchored.

With information from LGI