Argentina: Inflation surged 4% in August, mainly due to the peso depreciation following Primary elections
- As expected, inflation accelerated again in August, consequence of the economic outlook change that occurred in the past month. Although increases in prices of regulated goods and services, including gas, are on hold, the exchange rate hike rapidly passed-through into prices. Core inflation rose 4.6%, above the general index.
- Food, Transport and Health were main contributors to the monthly variation, accounting for 65% of the overall increase. Prices rose 54.5% yoy, and 30% in eight months. After October´s elections, the government will send to Congress the 2020 Budget Bill, which includes a 34% inflation estimate for next year.
- Although FX regulations have stopped further peso depreciation, political uncertainty and the economy´s vulnerability still exert pressure, evidenced in alternative FX markets. The spread between CCL dollar and the wholesale market quote reached 30% as company´s faced restrictions to send funds abroad, while in the free market the dollar increased the spread to 16%.