According to the latest report issued by IERAL, Fundación Mediterránea, in Argentina inflation in food and non-alcoholic beverages, which will average 3.0% per month in 2020, 3.5% in 2021, and 5.7% in 2022, marked 6.8% in January 2023 (IPC INDEC Nacional). For its part, in Latin America (10 countries), inflation for the same item of goods, which was 0.3% per month, 0.6% and 1.0% in the last three years (respectively, median value), started 2023 with a monthly value of 0.9%. At least three relevant observations emerge when analyzing and comparing what is happening in Argentina versus the region in terms of food prices.
The first of these is that food inflation rates increased in 2022 compared to 2021, both locally and throughout LATAM. The rise in prices was not an isolated phenomenon, on the contrary, in all countries inflation was one step above. Surely the explanation lies in a combination of shocks that were transversal to all economies, factors derived from the Pandemic and the general response of governments to the health crisis, a scenario in which there were restrictions in the supply of raw materials. , logistics bottlenecks, a strong recovery in global demand after the recession, excess liquidity due to very expansive public policies, etc.
Second, the gap between local inflation and that of the neighbors, which was already high last year, started 2023 at an even higher level. In the first month of this year, the local rate was 7.7 times higher than that of the region (median value), a gap that becomes larger with some countries, for example, it reached 13.0 times if compared with Brazil, 0.1 times with Peru and 9.3 times with Bolivia. It should be remembered that last year the gap with the region was an average of 5.8 times, in 2021 it had been 5.5 times and in 2020 8.5 times.
In relation to last year, the inflation gap has increased with respect to 7 LATAM countries, decreased in relation to 2 and remained stable with 1 (Colombia). In those cases in which the gap decreased (Uruguay, Paraguay), this is due not to a slowdown in inflation in Argentina, which, as already mentioned, increased, but rather to a relative acceleration of the inflation rate in these countries. .
The third observation has to do with the concern generated by the inflation data for January 2023. While a declining trend is being observed in the region (slight, but the negative sign is clear), which extends to practically all countries (with greater or lesser intensity), this is not verified in the Argentine case, which on the contrary accelerated its inflation rate with respect to the 2022 average. In effect, the average monthly inflation of LATAM, which was 1.0% monthly last year, fell to 0.9% in the first month of this year, from an annualized rate that was close to 13%, the region went to a rate of 11%; On the contrary, in Argentina the average rate of 5.7% rose to 6.8%, from an annualized rate of 94.5% to 120.2%.