Economy
Argentina monthly inflation set to spike to 12% as Milei era begins
© Reuters. A kiosk owner rearranges newspapers, one day after the inauguration of Argentina’s President Javier Milei and his Vice President Victoria Villarruel, in Buenos Aires, Argentina, December 11, 2023. REUTERS/Agustin Marcarian
By Hernan Nessi
BUENOS AIRES (Reuters) – Argentina’s consumer prices likely spiked around 12% in November alone, a Reuters poll of analysts showed on Monday, which will be the first monthly inflation data under the government of new libertarian President Javier Milei.
The South American country, which swore in its new government on Sunday, is battling triple-digit annual inflation already at 143% and climbing fast. Milei has said he will fight “tooth and nail” to bring inflation down.
The Reuters poll of 22 analysts gave a median estimate of the CPI rising 11.9% in November, up from 8.3% in October. The analysts forecast even sharper price rises in the months ahead, with an expected devaluation likely to stoke inflation.
Milei, who gave a bleak maiden speech warning the country to buckle up tough times ahead, suggested that monthly inflation could be between 20% and 40% over the next few months.
“The outgoing government has left us on course for hyperinflation. We are going to do everything possible to avoid such a catastrophe,” he said on Sunday, warning that annual inflation could climb as high as 15,000% if not controlled.
The official statistics institute INDEC will publish November inflation data on Wednesday afternoon.
A libertarian economist and political outsider who espoused some radical views during the election campaign, Milei has put together a more mainstream first cabinet, focusing on sharp cuts to public spending to overturn a fiscal deficit.
“There is no alternative to a shock adjustment,” Milei said.
Projections among the analysts polled by Reuters ranged from a minimum rise of 9.4% to a maximum of 15% for November.
Latin America’s third-largest economy has one of the highest inflation rates in the world, which hammers voters’ purchasing power and pushes up poverty, currently at over 40%.
“While higher inflation is expected in the short term, the new government must execute a stabilization plan,” said Emilio Prado, an economist at the Libertad y Progreso Foundation. “So that prices begin to decelerate before the end of 2024.”
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
© Reuters. FILE PHOTO: Workers walk past an under-construction area with completed office towers in the background, in Shenzhen’s Qianhai new district, Guangdong province, China August 25, 2023. REUTERS/David Kirton/File Photo
SHANGHAI (Reuters) – China’s top planning body said on Saturday it had identified a second batch of public investment projects, including flood control and disaster relief programmes, under a bond issuance and investment plan announced in October to boost the economy.
With the latest tranche, China has now earmarked more than 800 billion yuan of its 1 trillion yuan ($140 billion) in additional government bond issuance in the fourth quarter, as it focuses on fiscal steps to shore up the flagging economy.
The National Development and Reform Commission (NDRC) said in a statement on Saturday it had identified 9,600 projects with planned investment of more than 560 billion yuan.
China’s economy, the world’s second largest, is struggling to regain its footing post-COVID-19 as policymakers grapple with tepid consumer demand, weak exports, falling foreign investment and a deepening real estate crisis.
The 1 trillion yuan in additional bond issuance will widen China’s 2023 budget deficit ratio to around 3.8 percent from 3 percent, the state-run Xinhua news agency has said.
“Construction of the projects will improve China’s flood control system, emergency response mechanism and disaster relief capabilities, and better protect people’s lives and property, so it is very significant,” the NDRC said.
The agency said it will coordinate with other government bodies to make sure that funds are allocated speedily for investment and that high standards of quality are maintained in project construction.
($1 = 7.1315 renminbi)
© Reuters. Russian Central Bank Governor Elvira Nabiullina attends a news conference in Moscow, Russia June 14, 2019. REUTERS/Shamil Zhumatov/File Photo
MOSCOW (Reuters) – Russia’s central bank will need two to three months to make sure that inflation is steadily declining before taking any decision on interest rate cuts, the bank’s governor Elvira Nabiullina told RBC media on Sunday.
The central bank raised its key interest rate by 100 basis points to 16% earlier in December, hiking for the fifth consecutive meeting in response to stubborn inflation, and suggested that its tightening cycle was nearly over.
Nabiullina said it was not yet clear when exactly the regulator would start cutting rates, however.
“We really need to make sure that inflation is steadily decreasing, that these are not one-off factors that can affect the rate of price growth in a particular month,” she said.
Nabiullina said the bank was taking into account a wide range of indicators but primarily those that “characterize the stability of inflation”.
“This will take two or three months or more – it depends on how much the wide range of indicators that characterize sustainable inflation declines,” she said.
The bank will next convene to set its benchmark rate on Feb. 16.
The governor also said the bank should have started monetary policy tightening earlier than in July, when it embarked on the rate-hiking cycle.
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