Argentina’s central bank kept its monetary policy rate at 26.25 percent, saying the national consumer price index it will use to gauge compliance with its inflation target was published for the first time and showed that accumulated inflation was similar to the previously used index for the Greater Buenos Aires area (GBA).
The monthly national consumer price inflation in June was 1.2 percent while annual inflation was 21.7 percent when the GBA index up to December 2016 was combined with the national consumer price index since January, said the Central Bank of Argentina (BCRA).
This is well above the central bank’s target for 2017 inflation of 12-17 percent but the BCRA added that data for May and June, along with other indicators, showed disinflation had resumed.
The June national CPI of 1.2 percent compares with 1.4 percent for Buenos Aires and the national core inflation rate in June was 1.3 percent.
In April the central bank surprised financial markets by raising its rate by 150 basis points after surveys showed that inflation expectations had risen.
The latest survey of CPI inflation expectations for end-2017 rose to 21.5 percent from 21.4 percent in the previous month, the BCRA said.
Expectations for 12-month inflation for June 2018 was steady at 17.0 percent along with expectations for 2018 inflation of 14.9 percent, above the bank’s 2018 target of 8-12 percent.
Argentina’s inflation rate rose to a 2017-high of 40.5 percent in April, with prices driven higher by the government’s removal of energy and transport subsidies to reduce the federal deficit.
In September last year, when the central bank adopted an inflation targeting regime, it said it would use a price index that had the highest geographical coverage.