Argentina's Minister of Economy, Luis Caputo, expressed optimism regarding the evolution of inflation and the exchange rate in Argentina. According to statements made in an interview with LN+, prices are going to fall faster than the market expects, while the dollar will tend toward the floating floor without disruptions.
"Inflation is going to collapse, it's a matter of time", Caputo assured. "With no issuance and a surplus, it will converge to the international level."
Private consulting firms estimate that the Consumer Price Index (CPI) for May could be around 2% monthly, marking a more pronounced slowdown than expected. According to the minister, this is the direct result of the orthodox economic plan based on eliminating monetary issuance and achieving fiscal balance.
Exchange rate: no shocks in sight
Caputo also reaffirmed his confidence in exchange rate stability: "The market sets the dollar." We lifted the controls and it's at the same level as the official rate, which shows it wasn't undervalued."
Caputo anticipa que la inflación caerá más rápido de lo previsto por el mercado
In that regard, he assured that no disruptions are expected: "With a surplus and no issuance, that's not going to happen."
Low liquidity in the economy: the role of the private sector
Regarding the general context, Caputo stated that there is a very small amount of pesos in circulation, which limits economic activity, but also helps contain inflation. To solve this, he proposed two paths:
"Remonetization can be done in pesos or in dollars. If people's dollars are used, that will facilitate the process."
He also pointed to a structural change in business behavior: "We came to lower taxes, reduce regulations, and open up competition. The private sector has to compete."
According to the official, at first there was distrust: "Businesspeople didn't believe us at all. Now many see that we're moving toward a different model." He added: "There will be winners and losers. Some will invest, others will sell their companies if they don't adapt."
Caputo anticipa que la inflación caerá más rápido de lo previsto por el mercado
Consulting firms validate the drop in the CPI
Equilibra estimates monthly inflation of 2% in May, after recording a weekly increase of 0.8% in the third week of the month. Although there had been deflation due to the Hot Sale, some sectors rose again, such as clothing and electronics.
LCG detected a weekly increase of 2.1%, driven by rises in meat (+2%) and vegetables (+4%), as well as baked goods.
In contrast, Econviews recorded a -0.5% weekly drop in food and beverages for Greater Buenos Aires, with produce prices falling by 5.5%.
These measurements show a mixed outlook, but all agree that the general index is stabilizing below 3%.
Exchange with Ricardo Darín over empanadas
In a more relaxed part of the interview, Caputo referred to comments made by actor Ricardo Darín, who had expressed concern about the high price of empanadas: "I felt secondhand embarrassment. He tried to act national and popular. Empanadas aren't worth that, Ricardito."
He made an ironic comparison with top-level cars: "It's like going to Porsche and saying the cars cost 200,000 dollars. You can have a good dozen for 16,000 pesos (about 35 dollars)."
