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. These indicators were consistent with the disinflation process already stated in previous releases of the BCRA.
The CPI for Greater Buenos Aires posted a monthly variation of 0.2% in August (against 2% in July), the CPI for the City of Buenos Aires fell 0.8% (inflation rate of 2.2% in July), but the CPI for Córdoba increased 0.3% (1.7% in July).
The slowdown in the official inflation rate agreed with the leading and high-frequency indicators to which the BCRA had referred in due time. However, August´s results must be taken cautiously. Firstly, due to a reversal of changes in the price of gas, causing regulated prices to go down. Leaving this issue aside, the inflation rate for Greater Buenos Aires, for the City of Buenos Aires, and for Córdoba would have been 0.6%, 0.9%, and 1%, respectively. Moreover, a fall of seasonal prices helped to moderate the general index, cutting inflation indicators down 0.5, 0.3, and 0.1 point, respectively.
Therefore, core inflation for Greater Buenos Aires (1.7% in August against 1.9% in July) and that for thte City of Buenos Aires and for Córdoba (1.6% in August against 2.3% in July in both districts) show that the disinflation process is on track to the monetary authority’s inflation target of 1.5% or lower for the last quarter of 2016.
Finally, high-frequency indicators monitored by the BCRA exhibited a heterogeneous performance, which, for the time being, does not change the disinflation expected by the monetary authority for the following months.
On the basis of this information, the BCRA reduced both the monetary policy rate and the repo rates by 50 basis points, the former falling to 27.25%. The BCRA will continue to take precautionary actions seeking to ensure a sustained disinflation process.
As stated in the previous release, the BCRA deems it appropriate to focus monetary policy on medium-term inflation expectations, especially those for 2017.
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.
