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Indec today describes inflation in May: it would be about 3% and the downward trend will deepen

Inflation in May of about 3% which today will be revealed by INDEC will have a bittersweet taste. On the one hand, it will mark the second month in a row with a downward trend, after 3.4% in April. But on the other hand, the cumulative over the last twelve months shows 57%, the highest in more than 25 years.

Only from next month will one begin to see a trend and much more favorable in terms of inflation, as there will be a new decline (third in succession) in the monthly data but will also begin to reverse the annual report.

Most consultants estimated one month's inflation to be between 3% and 3.4%, although some also placed the index slightly in the "2 and peak" range. But beyond the various calculations, It seems clear that the process of "disinflation" is here to stay and would continue until the end of the year. According to the expectations of economists and consultants, the levels could be seen at the end of 2019 more than 2% per month.

Last month there were some increases that affect the index, for example the increase in fuels, a new share of the increase in gas and also in water. However, the weight will not be so significant. On the other hand, it played out that the dollar was practically not moving, as the increase was 1.6 percent in May.

The stability of the exchange rate is a key element in starting to calm price adjustments, especially in food. A data released in April that can be repeated in May is that core inflation would return below average. They include prices for food and other non-regulated goods.

Another factor that helped last month was "Hot Sale", with strong deals on tickets, appliances and even supermarkets. In many cases, prices were lower even after the special offers for continued sales. This would also influence the maize measurement.

For this month we see the same effect as the previous month but even more marked. Even though mid-June has not yet been reached, the exchange rate falls, with the selling price below $ 45. should have an important effect in comparing price adjustments.

In various sectors, such as food or fuel, they claim that there is still a surplus to be transferred after the mega-evaluation last year. Of course, the revaluation of peso means that this transfer becomes smaller. In addition, the sales reduction limits the ability to reformulate.

Although it is currently too early, all indications are that inflation in June could be at levels close to 2.5% and continue since the gradual downturn.

This decline in inflation, along with wage increases following the termination of paritarians, should have a beneficial impact on the gradual recovery of purchasing power.

If this scenario is maintained, it is ideal for the government's plans to think about the election: dollars under control, inflation with a downward trend, and gradual recovery of purchasing power.

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