Inflation is already assimilated into the Argentine economic panorama as one more element of the landscape. Perhaps that slow climb up the steps was getting used to a reality that is out of the ordinary in the rest of the region. In Uruguay, for example, the CPI for May fell 0.01%, accumulated in the first five months of the year a rise of 4.26% (ten times less than in our country) and in the interannual measurement it showed 7.1%. This means that the very close neighboring economies live with inflation that is even lower than that measured by the INDEC in just one month.
The numbers
This serves to measure the distortions that a very long inflationary process has on the economic dynamics, but above all on the most sensitive social variables. First, if inflation were neutral (ie, if all items rose in the same way) there would be no change in relative prices. This is relevant because not all groups consume the same combination of goods, so it can affect depending on the type of consumption that is carried out. The problem with these differences is that it is not possible, from the production side, planning investments with such instability in prices. And from consumption, in supply problems or an abrupt jump when they cannot be sustained over time.
To correct some of these peculiarities, the “seasonally adjusted” CPI measurement is taken. The adjustment process quantifies seasonal patterns and then excludes them from the index to allow analysis of price movements without these effects.
The Economist Martin Gonzalez Rozadaof the Torcuato Di Tella University produces a non-seasonal consumer price index (IPCse) to carry out these measurements. For example, In April, the CPI (INDEC) showed 8.4% and the CPIse 8.3% because the seasonal effect on fruits and vegetables and the “star” item, clothing, which had risen only 10 in that month, were isolated. 8% But for May, the official index showed 7.8% and the CPI was 8.2%. With these data, a cold cloth is put on the supposed low inflation and the arrival of months with inflation on a notch below (between 6% and 7%).
Deceleration
In its latest weekly report, the consultancy eco go maintains that the monthly rise is still high and much of the slowdown was due to issues of greater food supply. “Excluding these effects, the increase in the GBA for food would have gone from 5.7% per month to 9% and the general data from 8% per month to 8.8% per month”, he warns.
The official effort to keep the price index at bay, which ends up determining the decisive electoral variable of the real salary, must navigate through stormy waters: the already well-repentant shortage of dollars that ends up stifling economic activity and the difficulty of being able to comply with the agreements in the “Fair Prices” program and the delays in rate indexing. youIt also affects the acceleration of daily devaluations that forces the Minister of Economy to face a dilemma: comply with the agreement with the IMF to get some dollars or step on it so as not to add gasoline to the fire.
The other option to appease an eventual rise in inflation is that the recession could play an anchor role “for the hard way.” IERAL In this sense, it considers that “the sales of mass consumption products would have entered negative territory in May in the interannual measurement, a phenomenon that is deepening in June, given the loss of purchasing power of the population.”
To this is also added that, simultaneously, the stock of credit in pesos to the private sector shrank by 16.2% in real terms in the last 12 months, a downward trajectory that includes a contraction of 8.5% so far of 2023. This combination of factors is already beginning to be reflected in some indicators, such as the “proxy” of GDP prepared by the Orlando Ferreres study, with a year-on-year drop in the level of activity of 3.8% for April that could deepen in the remainder of the year. second quarterand.
measured poor
González Rozada also the “nowcast” of poverty: this is an estimate of what will later be released by INDEC. Let’s remember that in December it had thrown 39% but the inflationary acceleration eroded purchasing power and will affect the next measurement. “We are projecting the poverty rate for the first semester of the year that INDEC will publish at the end of September (a few days before the elections) at around 44% and it means that we expect an incidence of official poverty that is in that range”, Explain. On the other hand, for the second semester of the year the projection is not clear due to the high degree of uncertainty, the result of the STEP and the evolution of the inflation of the total basic basket and household income.
insufficient employment
In relation to the traditional variable of employment, the paradox is that this situation of uncertainty has not (yet) affected unemployment. “What we have observed so far is that during 2022 and early 2023 employment growth was due to an increase in registered work of lower quality (monotributistas and social monotributistas) and informal workers, who are the lowest income strata”, points out the economist.
But the fact that employment growth has occurred in workers from the lowest strata of the income distribution plus the increase in the total basic basket of more than 100% per year, “suggests that total family income is unlikely to increase due to above those values. In the first quarter of this year, total family income in CABA grew “only” 85%, so an even lower growth is expected in the suburbs. The calculation yields a new defeat in the war against inflation.
In conclusion, in addition to the unequal price-salary race, it is necessary to consider the movement of relative prices in the weight of the basic basket and the particularity of the labor market in which the person works. Until now, the evolution of employment was decisive in explaining the growth in poverty. In a recent work by Social Debt Observatory (ODSA) of the UCA, “20 years after the end of the convertibility crisis: two decades of labor segmentation, deterioration of occupations and poverty in urban Argentina (2003-2022)”it is concluded that, in the last two decades, “around half of the working urban population faced some type of problem related to the quality of their labor insertion”.
During this period, employment in the secondary or unregulated segment became the main problem, reaching almost a quarter of the active labor force in Argentina. Also, that almost 4 out of 10 employed were linked to the urban informal sector, in salaried modalities or for independent work and 7 out of 10 employed were in a precarious employment situation or in a job with indigence income. as i remembered Augustine Sagethe director of the ODSA, all this dynamic ended up throwing another “crack”: lThe remunerations of formal private employees, public employment and those employed independently in the formal sector were always substantially above the general average, although the gaps favorable to these groups have receded in recent years. A parity, which, in this case, has been equalizing downwards.
