The province of San Luis’ inflation rate and the results of some expectations surveys conducted by the BCRA were released last week.
July’s inflation rate was 2.3% in San Luis. Although June’s inflation rate was lower (1.5%), it was significantly influenced by a reversion of increases in regulated prices. Should that effect be disregarded, San Luis’ inflation rate would have posted a slowdown between June and July.
With this record, the national inflation index calculated by the BCRA with data from CABA, Córdoba, and San Luis stood at 2.0% in the month of July, showing a slowdown compared to the 2.6% that had been recorded in the month of June. The structure of the index can be found in the July Monetary Policy Report (p. 45).
Inflation expectations of the public surveyed by the Universidad Torcuato Di Tella remained stable at 25% to 12 months, while those of analysts surveyed by Consensus Economics showed slight variations and for the fourth quarter are located at 1.6% monthly, very close to the BCRA’s target for that period (1.5% monthly or lower).
The drop in July inflation confirmed what had been anticipated by indicators and estimates from state and private sources mentioned in previous releases. These same sources suggest today that the disinflation process continues in the first three weeks of August, even without counting the effect of the reversal in the increases in regulated prices derived from the Supreme Court ruling last week.
The volatility generated by the corrections of regulated prices on the general level of price indices makes it more relevant, towards the future, to pay attention to the evolution of the core component of the same. As highlighted in previous releases, this component recorded a slowdown between June and July for all the districts that calculate it: 3.0% to 1.9% for IPC GBA, 3.6% to 2.3% for IPC CABA and 2.6% to 2.3% for IPC Córdoba.
Taking this information into account, the BCRA decided to reduce its monetary policy rate by 50 basis points to 28.75% and its repo rates by the same magnitude. The monetary authority will continue to proceed with caution, seeking to ensure that the disinflation observed in recent weeks is maintained over time.
The BCRA will continue the anti-inflationary bias to make sure that the disinflationary process will go on to achieve the objective for this year of 1.5% monthly inflation or lower in the last quarter.
