The government of mercy makes each data a report on the alleged “success” of the economic plan. Of course, the data is carefully selected, exaggerated in cases, minimized or hidden in others. Public insistence on the image of stability and success at this time are key to the government precisely otherwise: The economy has no solid bases, The balance is very unstable and circumstantially sustained on that facade to postpone as much as possible the dreaded devaluation expectations.
INDEC data about the inflation He was in the center of the scene again. He 2.2% monthly On average in January he raised suspicions for the contrast with the perception that the salaries and certainty that money reaches less and less is liquefied. This fact, we had been pointing out months ago. In theory an inflation deceleration would imply greater well -being and a recovery of the purchasing power, and In fact that was Milei’s promise.
INDEC data says it was only 2.2%. I know, nobody feels like that. But it is not a sensation, it is that the government refuses to update the weighting of the products that increased the most and with that low the impact on the final number. Great work of Lavagna.
— Myriam Bregman (@myriambregman) February 13, 2025
Why if inflation drops does not improve our economic situation as they said
In the first place, for lower inflation to improve purchasing power, popular wages and income should grow faster than prices. The point of the discussion is that the Government intentionally leaves without updating the methodology of calculation of the price index, which is currently favorable so that the index ends up giving down.
For example, the CEPA center states that if the composition of the basket of household goods and services was updated, the accumulated inflation with the Milei government would be 26.5 higher percentage points (or 14.8% more) than what today, totaling 205.8% against 179.3% showing the INDEC CPI (taking the period December 2023 to January 2025).
INDEC announced the inflation of January 2025 (2.2%), in line with what the REM consultants (2.3%) estimated.
However, as we have been holding the basket used by INDEC to calculate inflation, it is not representative of the consumption of Argentine households … pic.twitter.com/Lyo0N14mtB
– Hernán Letcher (@hernanletcher) February 13, 2025
Why does that happen? Inflation is measured as an average price rise, and for this it is weighted what incidence each good and service has in the total basket, based on a household spending survey. Today the INDEC that drives Marco Lavagna since 2019 continues to use a basket based on the consumption of households in 2004/05.
In the last year of Milei’s government Public Services RateCommunication (cell phone), transport and other services had a great leap and made themselves feel a lot in popular pockets. Precisely, in recent years public services have greater weight in the basket of consumption of household goods and services due to changes in consumption patterns and also to the increases in rates, but these modifications were not yet impacted in the Inflation measurement methodology, even when there is an expense survey of the households of the year 2017/18 that would allow it.
The government’s data trap with inflation: since the INDEC has not updated the methodology is underestimated the tariffs
In the last year the rates increased well above the average prices
Services have long “weigh” much more in consumption pic.twitter.com/mOlfipzEGz
– Lucía Ortega (@ortegalu_) February 13, 2025
That is also reflected in the 55%gap between CABA CPI (3.1%) and IPC INDEC (2.2%) For January, as the UBA economist points out, Juan Graña. In the Statistics Department of the City of Buenos Aires they adopted the decision to update the index methodology since February 2022. As of December 2023, when the rates jumped, both indexes began to diverge.
IPC INDEC vs IPC CABA
Almost everyone knows that there is a methodological debate regarding how inflation is measured in 🇦🇷.
Today the number of the Nac National INDEC with 2.2% came out (in GBA it gave less: 2%)
A week ago the IPC CABA came out and gave: 3.1%Mini thread. 🧵
— John M. Create 🧡 (@JuanMGrana) February 13, 2025
It is not strictly manipulation, but the index objectively It loses precision and therefore it ends up distorting its ability to reflect the real evolution of the prices of a representative basket of consumer goods and services (it is precisely the consumer price index). While it is still useful for showing trends, it loses solidity.
When this happens steadily over time, the index ceases to be a common reference for economic and political interpretations and readings of reality, such as being able to define whether real wages improved or worsened, what is the evolution of the purchasing power of the Retireations, what is the magnitude of the fiscal adjustment, etc.
But what is worse, begins to have practical effects that harm some and benefit others, not only for price measurement in general but for the determination of other prices in the economy. For example, in the bargaining Workers have fewer elements to achieve salary increases that exceed inflation and rebuild the loss of recent years, and employers will take advantage of an IPC underestimated in negotiation.
That is why The methodological criticisms that arise in this regard are not only legitimate, but also necessary.
Until they give the sign of stop with the “Carry Trade”
Anyway, It cannot be denied that the price trend is at a slowdownwhether using a basket of goods and services of 20 years or another of 7 ago. Compared to the high levels to which Milei and Caputo took it at the end of 2023 when they performed a devaluation of the currency of almost 120%, they deregulated prices , they fired rates, among other measures, there is plenty of the basis of high and chronic inflation of the management of Fernández and Massa, the result is of a slowdown in inflation.
As we said above, It is not a deceleration large enough to impact on an improvement of wages and economic activity. This is because precisely the prices that most lagged down are salaries.
The question Why does it happen and what expresses. The explanation is not the sanitation of the “fiscal deficit” as Milei presents, but of a Sinking of the economy and consumption that contracted at historical levels the demand.
That is, the lower rhythm of price increase speaks of the brutal adjustment to which the management of freedom advances exposed to working majorities. A cut of public spending on retirement, social items, public works, education (university), health, layoff above), among others.
So, and especially in recent months, The main prices anchor was the exchange rate appreciationand for that the government used “stocks“Cambiary (State intervention in the economy) and the intervention of the Central Bank in the cash, with a very high cost in loss of dollars, while Pay the debt maturities.
The entry of dollars of the bleach acted as an incentive, and the “carry trade” o Financial bicycle made by banks and speculators with the monetary scheme (of interest rates superior to the rhythm of devaluation) and exchange, obtaining huge benefits in dollars, also supports the fine balance that prevents the economy from vuele by air.
The economy already accumulates seven months of deficit in your current account. December closed with a deficit of US $ 1141 million for “net expenses in all its accounts.” In this way, the US $ 9161 million surplus was reduced until the end of May to only US $ 1695 million in the year. The little competitiveness of the industry ends up being destroyed with the “cheap dollar”, the importing opening and now also, tariffs that Trump would impose for some products such as steel and aluminumaffecting one of the main beneficiaries of the Milei model: Paolo Rocca and the Techint Group.
As long as the Expectation of devaluationthis scheme can last a few weeks or more months. The doubt is if it will reach the elections. There appeared the “promises” of reaching an agreement with the IMF to bring fresh funds on the basis of greater mortgages, but that option is every time it shows how it is: a screen. And to alleviate the lack of dollars, the SOJA dollar was raised until the middle of the year, trying to foster the liquidation of agriculture.
However, the Climate change (Milei denies), the drought and the same exchange rate appreciation are hitting the chicken of the golden eggs. The field faces permanent cuts in harvest forecasts for this year, which could further complicate the external front. According to the Rosario Stock Exchange (BCR)the soybean harvest is estimated at 47.5 million tons (MT), which represents a 5 mt drop regarding the initial forecasts of September. Meanwhile, corn production adjusted to 46 mt, marking a 6 mt reduction with respect to campaign start projections and 2 Mt less compared to the January estimate.
The more the government strives to show that “everything is fine”, the greater the certainty that they will seek to impose the consequences of the crisis on the backs of the workers. At some point “the markets” will give the signal of finishing their speculative cycle and withdrawing their short -term investments, as happened with Macri in April 2018. But It will not be enough to alter, by action or omission, an official index.
Source: www.laizquierdadiario.com
