Last week, the CPI for San Luis was published by the Province of San Luis, and the wholesale price index and the construction cost index were released by the National Institute of Statistics and Censuses (Instituto Nacional de Estadísticas y Censos, INDEC). The table that follows shows the results:
Retail inflation in San Luis exhibits a similar performance to other districts, with October’s records higher than the previous months due to the rise in the price of gas. The resulting inflation stands at 1.2% after discounting the rise in the housing and basic services category. In turn, wholesale price inflation remained below 1% monthly for the third month in a row. Regarding construction costs, the headline inflation was higher in October, mainly due to the wage increase in the sector that took place this month. Today, Universidad Torcuato Di Tella released its inflation expectations index. The median 12-month expectation stood at 25%, higher than the 20% recorded in September and October.
Between the last week of September and the first week of November, the BCRA kept the interest rate unchanged to prevent October’s inflation increase, related to adjustments to utility rates, from affecting subsequent inflation. Indeed, the estimates and high-frequency indicators from public and private sources monitored by the BCRA suggest that, during November, prices have been in line with the goal set in May: a 1.5% or lower average inflation rate (equivalent to 19.6% or lower annualized rate) in the last quarter of 2016.
In view of the available data, the BCRA reduced the 35-day LEBAC rate and the center of the repo corridor by 50 basis points, which reached 25.25%.
The BCRA will continue taking anti-inflationary measures to ensure a sustained disinflationary process towards its objective for this year (1.5% monthly inflation rate or lower in the last months) and a decreasing trend of inflation expectations for 2017, getting closer to the 12%-17% target.
The estimates and high-frequency indicators from public and private sources monitored by the BCRA suggest that, during December, inflation will be in line with the monetary authority’s goal.
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.
