Argentina: Buenos Aires inflation inches up in July
August 12, 2016
In July, consumer prices in the greater Buenos Aires capital area increased 2.0% over the previous month, according to recent data published by the National Statistics Institute (INDEC). The figure marked a deceleration over the 3.1% increase recorded in the previous month. INDEC attributed the monthly increase to higher prices for recreation as well as for food and drinks. Inflationary pressures remain high due to the steep depreciation of the currency after the removal of currency controls and to the scrapping of utility subsidies.
INDEC did not release inflation figures and announced that it would start publishing year-on-year variations in consumer prices when a base of comparison is available. Data compiled by the City of Buenos Aires show that in July, inflation continued the upward trend that has been in place since December 2015. Inflation inched up from 47.1% in June to 47.2%, thus hitting a multi-year high.
Since 2 August, the Central Bank of Argentina (BCRA) has reduced the 35-day Lebac interest rate by an accumulative 125 basis points to 28.75%. The Central Bank introduced the rate for the first time in December of last year and has been using it as its main monetary policy instrument since March of this year.
Author: Dirina Mançellari, Senior Economist