The Minister of Economy, Martín Guzmán, received the Secretary of Internal Trade, Roberto Felettito discuss price control strategy in a context of rising inflation.
‘First formal working meeting between the two, after transfer,’ official sources say Infobase. This is because the area has passed from the Ministry of Productive Development, which directs Matias Kufas to the economy, where Guzmán received Feletti after noon.
The government prays that this month inflation is one notch lower than in April, when it reached 6% and 58% over the past 12 months; private consultants they predict it will be between 5 and 5.5%it will therefore exceed 60% last year and will be 100% annualized. By the end of the year, analysts expect it to be around 70%, although the speed will depend on the contraction of the local economy – GDP is only expected to grow by 3% , due to the statistical slowdown of 2021 – and the impact of the Russian invasion of Ukraine.
Less price dispersion
The intention of Guzmán, who feels relieved as he believes that the International Monetary Fund (IMF) has already approved the objectives for the first quarter of the year and will therefore make the corresponding disbursement next month to the country, is that he there’s not that big of a gap between prudent and unregulated pricing. The Minister and Feletti discussed this issue and confidence for the wheat sector, among others, at the Palacio de Hacienda.
High price dispersion is a typical phenomenon of an economy with high inflation and a lack of strong anchors, despite the fact that the government maintains a certain lag in the official exchange rate and has not yet implemented adjustment of utility rates.
Last week, the two returned to reconnect in person to try to reach a reconciliation after a few public exchanges, mainly on the need to increase retentions of wheat, sunflower and maize in response to accelerating inflation to decouple local prices from international prices, although export duties do not address the causes of inflation nor are they effective in this regard. regard.
Among the arguments for deciding on the transfer of the secretariat to the Government House, they explained that “Guzmán will have more direct tools, while Kulfas will focus on everything related to production”; In fact, Kulfas and Feletti didn’t have a good relationship, and the Treasury hopes to change that story.
Feletti has openly defended the higher deductions; In various statements, he said: “In the trade balance, there are two issues, export duties which can be mobile, which accompany fluctuations in international prices. And on the other hand, we need a plan to secure foreign currency for these supplies.
Meanwhile, Guzmán ratified that “the export duties will not be increased, the decision is made by the president, and every official must respect the president’s decisions.”
In this regard, he insisted that “to give continuity to the economic recovery, Argentina needs dollars. If we ban exports or increase withholdings, no more dollars will come in.” “The accumulation of reserves is a fundamental pillar of economic policy, in order to anchor inflationary expectations,” explained the minister.
Despite this, and despite Economics insisting that there is no longer an attempt to raise agricultural export rates on the agenda, last Friday the president said otherwise.
“We need to decouple internal prices from external prices. The instrument with which this is most easily done is restraint. Now, holdbacks are a legislative matter and I need Congress to understand the issue and, if necessary, support a decision of this nature.“Assured the Head of State on Friday.
However, a few hours later, his Agriculture Minister Julián Domínguez spoke out against the measure from his personal Twitter account.
“Before presenting the GanAr plan in Cordoba, I spoke with @alferdez, @JuanManzurOK and @gabicerru. Since I took office, the president’s concern has been to increase food for Argentines. Under no circumstances will deductions be increased or an invoice sent,” condemned the minister.
This Monday, the president insisted on the subject and blamed the opposition for the lack of progress on the issuedespite the fact that their own ministers oppose the increase in deductions, in a true reflection of the national cabinet’s lack of coordination on the economic orientation and communication strategy of a very sensitive subject.