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ARGENTINA: Disinflation Process Expected To Continue

ARGENTINA
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  • Yesterday’s January CPI release confirmed that inflation pressures continue to ease, with monthly headline CPI at its lowest since the start of President Milei’s term and monthly core CPI at 2.4% m/m, vs. 3.2% in December. Both headline and core annual CPI inflation returned to double-digit territory for the first time in two years.
    • JP Morgan notes that their preferred metric of underlying inflation, core ex-food printed at 2.5%m/m, vs. 2.7% previously. Once adjusted for seasonality, both core and core ex. food decelerated to 26.5%ar and 27.5%ar, respectively, in the last three months. JPM notes that core goods prices have decelerated strongly (to +0.2% m/m, sa), while core services pressures are more persistent (+4.0% m/m, sa). Looking ahead, JPM says monthly headline inflation is tracking at 2.4% m/m for February. They see annual inflation falling to 23.0% y/y by year-end.
    • Goldman Sachs revise their year-end forecast for headline inflation to 27% y/y from 30% previously (vs. 84.5% in January). Sequentially, they expect goods price inflation to ease towards the 1% crawl in the coming months but still see services inflation as relatively high as real wages continue to catch up to the high realised inflation prints of the past years. They also expect the tight capital controls in the economy to persist over the next few months.
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  • Yesterday’s January CPI release confirmed that inflation pressures continue to ease, with monthly headline CPI at its lowest since the start of President Milei’s term and monthly core CPI at 2.4% m/m, vs. 3.2% in December. Both headline and core annual CPI inflation returned to double-digit territory for the first time in two years.
    • JP Morgan notes that their preferred metric of underlying inflation, core ex-food printed at 2.5%m/m, vs. 2.7% previously. Once adjusted for seasonality, both core and core ex. food decelerated to 26.5%ar and 27.5%ar, respectively, in the last three months. JPM notes that core goods prices have decelerated strongly (to +0.2% m/m, sa), while core services pressures are more persistent (+4.0% m/m, sa). Looking ahead, JPM says monthly headline inflation is tracking at 2.4% m/m for February. They see annual inflation falling to 23.0% y/y by year-end.
    • Goldman Sachs revise their year-end forecast for headline inflation to 27% y/y from 30% previously (vs. 84.5% in January). Sequentially, they expect goods price inflation to ease towards the 1% crawl in the coming months but still see services inflation as relatively high as real wages continue to catch up to the high realised inflation prints of the past years. They also expect the tight capital controls in the economy to persist over the next few months.