For the second consecutive month, Inflation slowed again in the City of Buenos Aires and marked an advance of 2.1% monthly in May. Although the items of food, housing, health and education once again put pressure on the general index, the Buenos Aires indicator showed a drop of 0.4 percentage points compared to the previous month (2.5%).
As reported this Monday by the Buenos Aires Institute of Statistics and Censusesinflation accumulated 14% in the first five months of the year, while the cost of living increased 33.1% year-on-year. On Thursday of this week, the national data from Indec will be known, which According to estimates from private consulting firms, it will be between 2.1% and 2.5% monthly.
The main impulse of the month once again came from the Food and non-alcoholic beverages, which climbed above the general average and marked 2.8% monthly and 30.2% in one year. Within the division, the jump in Vegetables, tubers and legumes stood out, with an increase of 14.5%, while Dairy and eggs advanced 3.7%, and Bread and cereals 2.6%.
In contrast, Meats and derivatives —one of the items that had put the most pressure in previous months—increased barely 0.5% in May and Fruits registered a deflation of 3.4% monthlywhich contributed to slowing the rise of this division.
However, the category that had the most marked increase was that of Educationwhich noted an increase in 3.1% monthly and 33.5% year-on-year. This contributed to an impact of 0.16 percentage points on the general index, as a result of the increases in the fees of formal education establishments at the initial, primary and secondary level.
Slightly behind was the category of Health, which advanced 3% in the month of May and 31.9% in the last year. In this case, the rise was driven by the adjustments in prepaid medicine fees, which accumulate 32.7% year-on-year.
As to Housing, water, electricity and other fuels, The item that concentrates public service rates, during the past month increased 2.2% monthly and 37.5% when measured year-on-year. This category had an impact of 0.44 points on the general level, due to the increases that occurred rents and common expenses for housing, along with adjustments in residential water supply service rates.
Other categories that were above the average in May in the Buenos Aires inflation report were Home equipment and maintenance, with 2.9% (25.6% year-on-year); Information and communication, with 2.2% (25.6% year-on-year); and Insurance and financial services, with 2.2% (46.2% year-on-year).
On the other hand, there were some sectors of the economy that increased below the general index. In this universe there are clothing and footwear, with a monthly advance of just 0.4% (and 11.9% year-on-year); restaurants and hotels, with a positive variation of 1% (32.1% annually); Transport, with an increase of 1.2% (47%); alcoholic beverages and tobacco, with an increase of 1.3% (23.5%); Recreation and culture, with 1.8% (33.1%); and Personal care, social protection and other products with an increase of 2% (35.3%).
When disaggregating by subscripts, During May, regulated prices increased by 2.8%, especially due to prepaid medicine fees and school fees, followed by bus fares and water fees. In the last year, the pace of increase accelerated 40.9% year-on-year, 1.5 percentage points more than the previous month.
On the other hand, seasonal goods and services averaged an increase of just 0.1%, mainly due to increases in vegetables, but offset by the fall in airline tickets, hotel rates and the price of fruits. In year-on-year terms, accelerated 19.7%, about 4.4 percentage points more than in April.
This way, core inflation —which excludes these two items— was 2.1%. In year-on-year terms, it remained stable at 32.1%. This disaggregation is made up of measuring the Rest of the IPCBA, a subbasket that measures the variation in prices of goods and services that do not have seasonal behavior nor are subject to regulation.
“Our estimate for the data that Indec will publish this Thursday was 2.2%, so we already expected a slowdown compared to the levels of March and April. But beyond this slowdown, we still do not see a marked downward trend. The fixed exchange rate and slowed activity that postpones the distributive bid have been acting as an anchor, but the inertia remains high and imposes a floor above 1% per month. Taking the variations of the Buenos Aires inflation items, but the weights of the Indec index (those of the Engho 2014/15), gives us an inflation of around 2%,” said Melisa Sala, principal economist at LCG.
This Thursday the national inflation for May will be known and the expectation is whether the slowdown in prices is confirmed for the second consecutive month. The main economic consultancies place it between 2.1% and 2.5% monthly, mainly due to lower pressure from the food and beverage sector.
“The data is very in line with our estimates, 2.2%. I think the slowdown is confirmed, especially because in the Rest category, which would be the core, marked 2.1%. It is the lowest since the middle of last year and it is going down systematically. It is very likely that Indec will confirm something similar. When looking at categories, Food and Beverages grew a little more, with a lot of impact on vegetables, while meat remained calm. There were also adjustments in prepaid, public transportation, but quite in line with what was expected,” said Camilo Tiscornia, director of C&T Asesores Economicos.
