Heard on “No Te Duermas”
inflation. In the usual economics and finance column of the radio program, Darío Banga highlighted the inflation figures and the objectives that the government is failing to meet.
Tomás Modini
@ModiniTomas
Changes in Inflation Measurement Methodology
At the beginning of the column, Darío Banga addressed the changes in the inflation measurement system: “This week, one of the focal points was the August inflation data, which will be released on September 11. This morning (Friday), Marco Lavagna, head of INDEC, announced that a new Consumer Price Index (CPI) will be introduced starting in September.”
“In this regard, they will change the measurement methodology, increasing the number of prices tracked from 320,000 to 500,000 and also changing the data sources. The government has provided little information, but that’s the gist of it,” he elaborated.
He then noted that “it is understood that it would be more precise, but there is no additional information” and that “supposedly, the calculation method and variables will change, but for now, this is all we have and we will see how it develops over time.”
August Inflation Data
On the other hand, focusing more on financial matters, Banga stated: “Private consultants have projected the inflation rate for August. Most estimates are around 3.8 to 4 percent, which is approximately where core inflation stands today. The government believes it will continue to decrease, and many consultants had projected that core inflation would decline in August and approach 3 percent.”
“However, it is not close to the 2 percent target set by the government; instead, it is approaching 4 percent. This is why they focus on core inflation, where all private sources agree it will be decreasing. The government also estimates it will be around 3.5 percent in September and aims to decrease it further by the end of the year. Some advisors indicate this,” he added.
At the same time, he pointed out that “the government’s goal is to lower inflation to 2 percent, and that is what they are aiming for.” He also mentioned that “what they will likely try to achieve is to bring core inflation to that number, which, due to its seasonal and regulated components, may vary by a point up or down.”
This 2 percent core inflation would be tied to the official dollar and the devaluation currently occurring monthly. If Milei manages to tie inflation to 2 percent, it could reduce the devaluation of the foreign currency, stabilize the exchange rate, and eventually lift the capital controls,” he stated.
Government Aspirations
In the final segment of the column, the economist focused on Javier Milei’s government thoughts: “Caputo considers the lifting of capital controls unlikely this year and is already thinking about 2025. However, they are trying to inject some expectation into this issue. Caputo had said that inflation would be zero by the end of the year, yet it hasn’t fallen below 4 percent with three months left until December.”
“I am not familiar with the internal workings of the Ministry of Economy, but I believe the government has its own measurements through INDEC, while private sources provide external data that essentially perform the same job but seek data from other sources. What private sources do is anticipate the data, but sometimes there are differences,” he added.
To conclude, he emphasized that “the reality is that inflation is not near 2 percent, and regarding core inflation, it will be seen if it aligns with their expectations in September” and that “if core inflation trends close to 2 percent, they will be near the target they set.”
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