Fair, parity and dollar prices are the economic knots of the quarter

The rhythm that prices will have until March will define the 2023 inflationary game. And the economic team led by Sergio Massa follows minute by minute the movement of prices.

To reach 60% annual inflation, as foreseen in the current Budget, the economic cabinet has to play very hard in the first three months of this year; especially in these thirty days and in February. The inflationary imprint of both will define the thermometer of wage claims.

There are three variables that Massa’s team cannot neglect for a moment: prices, parities and dollars.

Fair prices. The recipe of the Secretary of Commerce for contain inflation it is trusting in the fire power of the Truckers union and social organizations to control the increases in the products that arrive at the supermarkets. It is a known mechanism that has already been tried with militants from La Cámpora and mayors, for example. From the supermarkets they have doubts about the final result to relieve their pockets.

with everything, in the economic cabinet they already take it for granted that Fair Prices will be extended, not only to step on increases in food but also in other products of relevance and impact on the rest of the economy such as fuel, for example, which are also adhered to this mechanism. The increase agreement authorizes, but never more than 4% each month.

A moderate goal will appease the pressures of social organizations

There are private consultants that warn about the price uptrend. In fact, considering that this month, after the 5.1% in December, it would once again be close to 6%. And, in this sense, the successive rounds of rise in the price of the blue dollar (which is used as a reference to set prices) generates caution due to the transfer that it could have in the final prices of the gondolas.

On Friday the blue reached the maximum price of the government of Alberto Fernandez and closed for the week at 370 pesos. The financiers accompanied the upward trend.

Fair prices. The program that the Government would extend beyond the first quarter expires in March. It covers food and also other products that are sensitive to pockets, such as fuel. PHOTO: Telam
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Parities. For the private sector, the annual inflation target of 60% is a ceiling, while for workers it would only be a floor. The Government would bet on short agreements with revisions. PHOTO: NA

Parities 2023. For the private sector the 60% The annual inflation target is a ceiling for salary increases that will begin to be discussed next month. For the guilds, on the other hand, it is a floor. In the Government they insist that it is not a tripartite negotiation but that unions and employers must reach an agreement, while “nobody talks about a ceiling.”

The fewer reopenings, the lower the chances of the social organizations with the most pickets claiming improvements in social allowancesthat put a lot of pressure on the meager public revenues of 2023.

They envision the same dynamic as in the last two years: short deals with regular newspapers that match or beat inflation. That is why the movement that prices will have this month and next is crucial. With increases of 4% everything closes both in the scheme of the portfolio of Work that leads Kelly Olmos, as in the CGT that understands the need for moderation in opposition to the pressures of social movements. Not to mention for the economic team, which does not want conflict in an election year where Massa is playing much more than reducing the increases.

With a view of the sea, Massa and Kicillof took account of the Coparticipation ruling: “It causes loss”

Dollar. Beyond the turbulence in the exchange rate, which many maintain is still behind inflation; What worries the most is the shortage of foreign currency in this brand new year.

There will be much less dollar income from the impact of drought on farm exportsbut also in a less favorable context regarding the prices of raw materials in the world market.

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Dollar. Beyond the exchange rates, what is worrying is the shortage of foreign currency in an electoral year with drought in the countryside, and with low international prices for raw materials. PHOTO: NA

It is a fundamental gear in a presidential election year. The economic cabinet must gradually adjust the tourniquet in the removal of subsidies and allocate fewer dollars to purchase energy, something that will happen if the nestor kirchner pipeline is effectively active in the middle of this year.

In 2022 alone, close to 9 billion dollars were used to buy energy and maintain the level of economic activity and supply to homes.

For the minister supporting the path of the reduction of subsidies is a requirement essential in discussions with the Monetary Fund which will continue this year, monitoring the national accounts every three months and drawing, after its approval, the disbursements necessary to anticipate very large maturities.

challenges

  • Fair prices. The program that the Government would extend beyond the first quarter expires in March. It covers food and also other products that are sensitive to pockets, such as fuel.
  • Parities. For the private sector, the annual inflation target of 60% is a ceiling, while for workers it would only be a floor. The Government would bet on short agreements with revisions.
  • Dollar. Beyond the exchange rates, what is worrying is the shortage of foreign currency in an electoral year with drought in the countryside, and with low international prices for raw materials.

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