In the last week, the inflation data for the IPC GBA, published by INDEC, was released. The general level increased 1.6% in the month of November, including an incidence of 0.1 percentage points corresponding to the carryover from the gas increase that occurred in October. The core component increased 1.7%. In the following table, you can find the inflation records for the last five months and their average (*).
| CPI | Greater Buenos Aires | |
|---|---|---|
| HEADLINE | CORE | |
| JULY | 2.0 | 1.9 |
| AUGUST | 0.2 | 1.7 |
| SEPTEMBER | 1.1 | 1.5 |
| OCTOBER | 2.4 | 1.8 |
| NOVEMBER | 1.6 | 1.7 |
| JUNE-NOVEMBER AVERAGE | 1.5 | 1.7 |
The wholesale price index and the construction cost index were released last week. The various wholesale price indicators increased by 1.1% (domestic wholesale price index (índice de precios internos al por mayor, IPIM)), 0.9% (domestic basic wholesale price index (índice de precios internos básicos al por mayor, IPIB)), and 0.9% (producer basic price index (índice de precios básicos del productor, IPP)) in November, while the average monthly changes over the past five months were 1% (IPIM), 1% (IPIB), and 0.9% (IPP). The construction cost index rose by 1.4% in November, with a 1.6% average monthly change over the past five months.
An analysis may evaluate the prospects of achieving an average monthly inflation target equal to or below 1.5% for the last quarter, since the headline CPI for Greater Buenos Aires is used by the BCRA to assess the fulfillment of its targets, and only December’s data is incomplete for this year. At the presentation of the Monetary Policy Report on October 18, the BCRA announced that, in order to assess its target—set before the court decision that led to utility rate changes—it would calculate an average of the August-October inflation rates for October, which includes both the fall and the rise in gas prices. See the table that follows for information on those months.
| CPI FOR GREATER BUENOS AIRES | AUGUST-OCTOBER | NOVEMBER | AVERAGE |
|---|---|---|---|
| HEADLINE | 1.2 | 1.6 | 1.4 |
Estimates and high-frequency indicators from public and private sources monitored by the BCRA suggest that the inflation rate for December will be in line with the target set by the monetary authority.
Considering that monetary policy operates with lags and the available information confirms that the BCRA is close to meeting its inflation target for the last quarter, the BCRA’s monetary policy focuses on achieving its inflation target for 2017.
In view of the available data, the BCRA decided to keep the 35-day LEBAC rate and the center of the repo corridor at 24.75%.
As part of the transition to the 7-day repo rate as the monetary policy rate, to take place in January, the BCRA reduced the width of the overnight repo corridor from 500 to 400 basis points and that of the 7-day repo corridor from 300 to 200 basis points.
The BCRA will continue taking anti-inflationary measures to ensure a sustained disinflationary process towards its inflation target between 12% and 17% in 2017.
