The inflation rate for the province of San Luis 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, the inflation rate for San Luis would have posted a slowdown between June and July.
The national inflation rate calculated by the BCRA based on data from the Autonomous City of Buenos Aires, Córdoba and San Luis stood at 2.0% in July, slowing down compared to the 2.6% recorded in June. The structure of the index is displayed in the Monetary Policy Report of July (page 45).
Inflation expectations of the public surveyed by Universidad Torcuato Di Tella remained stable at 25% for twelve months. However, the Consensus Economics’ surveys for the fourth quarter revealed that inflation expectations are 1.6% monthly, very close to the BCRA’s target (1.5% monthly or lower).
The drop in July´s inflation confirmed the indicators and estimates already released by public and private sources. The same sources suggest today that Argentina will continue to go through a disinflation process in the first three weeks of August, even without making allowances for the effect of the reversion in regulated price increases derived from the Supreme Court’s decision taken last week.
The volatility of the general level of price indexes caused by adjustments to regulated prices suggests that the evolution of their core component should be monitored. As highlighted in previous releases, this component recorded a slowdown between June and July as shown by the surveys made by the following districts: 3.0% to 1.9% according to the CPI for Greater Buenos Aires; 3.6% to 2.3% according to the CPI for the Autonomous City of Buenos Aires; and 2.6% to 2.3% according to the CPI for Córdoba.
Based on this information, the BCRA reduced the monetary policy rate and the repo rates by 50 basis points, the former standing at 28.75%. The BCRA will continue to take precautionary actions seeking to ensure a sustained disinflation process.
The BCRA will continue to take anti-inflationary measures to make sure that a sustained disinflationary process will go on to achieve the objective for this year (1.5% monthly inflation rate or lower in the last quarter).
