The CPIs for Greater Buenos Aires, for the City of Buenos Aires, and for Córdoba were published by the National Institute of Statistics and Censuses (Instituto Nacional de Estadísticas y Censos, INDEC), the City of Buenos Aires, and the province of Córdoba, respectively, last week. The results of the last few months were as follows:
| July | August | September | ||
|---|---|---|---|---|
| GREATER BUENOS AIRES | Headline | 2.0 | 0.2 | 1.1 |
| Core | 1.9 | 1.7 | 1.5 | |
| CITY OF BUENOS AIRES | Headline | 2.2 | -0.8 | 1.3 |
| Core | 2.3 | 1.6 | 1.5 | |
| CÓRODBA | Headline | 1.7 | 0.3 | 1.8 |
| Core | 2.3 | 1.6 | 2.0 |
As shown in the table, headline inflation indicators differ from core inflation mainly due to changes in regulated prices. The Supreme Court’s decision to suspend utility rates increases lowered the inflation rate for August and September. On the other hand, the increases already set by the government will increase inflation rates in October and, to a lesser extent, in November.
In this context of volatility in regulated prices, core inflation, which showed a clear disinflationary trend in the third quarter of the year, becomes more relevant.
Likewise, estimates and high-frequency indicators from public and private sources monitored by the BCRA show that prices in October evolved in line with the disinflation path set by the monetary authority.
Beyond the clear disinflation process over the past few months, the inflation expectations for 2017 obtained by the Market Expectations Survey (Relevamiento de Expectativas de Mercado, REM) carried out by the BCRA are three points above the upper end of the target range of 12% to 17%.
Thus, the BCRA has decided to keep both the monetary policy rate (at 26.75%) and the repo rates unchanged. This measure seeks to consolidate this year’s disinflation process and help inflation expectations for 2017 converge to the announced targets.
The BCRA will continue to take anti-inflationary measures to ensure a sustained disinflationary process to achieve the objective for this year (1.5% monthly inflation rate or lower in the last quarter), and a decreasing trend of inflation expectations for 2017.
