Argentina: Inflation drops to lowest level since July 2018 in August
Latest reading: Inflation eased to 33.6% in August, below July’s 36.6%. August’s figure marked the weakest inflation rate since July 2018 and was below market expectations. The moderation was broad-based across multiple goods and services.
Annual average inflation fell to 71.4% in August (July: 82.8%).
Lastly, consumer prices rose 1.88% in August over the previous month, moderating from the 1.90% increase recorded in July and also below market expectations.
Panelist insight: On the reading, Goldman Sachs’ Sergio Armella said:
“Amid tight domestic financial conditions, a contained inflation reading is welcoming news for President Milei after the setback delivered by the electorate in the Province of Buenos Aires Election […]. In our assessment, despite the moderate acceleration in core inflation, consumer prices continue to suggest a relatively low passthrough to inflation compared to depreciation episodes in previous years, something that is also reinforced by the muted response of inflation expectations in recent vintages of the central bank’s expectations survey. A low passthrough will also allow the currency to gain competitiveness, helping to improve the external accounts.”