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Argentina likely to see inflation tick up this year -analysts

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Argentina likely to see inflation tick up this year -analysts

Analysts consulted by Argentina’s central bank expect surging consumer prices to rise slightly this year, the bank said on Friday, which would mark a second straight year of near triple-digit inflation for South America’s second-biggest economy.

Consumer prices are seen rising by an annual rate of 97.6% in 2023, according to the analyst poll commissioned by the Argentine monetary authority (BCRA), compared to last year’s rate of 94.8%.

The bank’s latest REM survey compares to a December forecast of a 98.4% inflation rate by the end of this year.

The government of embattled President Alberto Fernandez sees creeping annual inflation for 2023 significantly lower, at just 60%, according to a budget projection.

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The survey’s inflation forecast sees some relief by 2024, however, with prices rising by 79.6%, but up from its previous estimate of 75%.
Suffering through a prolonged economic crisis marked by a massive debt load, chronic deficit spending and the steady erosion of the local peso currency, Argentines live with one of the world’s highest inflation rates, second only to Venezuela in Latin America.

Earlier this week, the BCRA announced it will roll out a new 2,000-peso bill, double the face value of its largest current bank note.

The analysts surveyed expect January’s inflation rate to come in at 5.6%. The monthly rise in prices last December stood at 5.1%, according to the official IPC price index.

Expectations of economic growth this year remain unchanged at 0.5%, according to the survey, while the official exchange rate is seen ending the year at 327.75 per U.S. dollar.

That would mark a 74% weakening of the tightly controlled official exchange rate, compared to its current value of about 188 pesos per greenback.

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The REM survey interviewed 40 experts from Jan. 27-31, including consultants, financial institutions and research centers.

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Nepra approves Rs3.28 per unit increase in power tariff

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Nepra approves Rs3.28 per unit increase in power tariff

The National Electric Power Regulatory Authority (Nepra) has approved Rs3.28 per unit increase in power tariff on the account of fuel cost adjustment for fourth quarter of fiscal year 2022-23.

The regulatory body has sent his decision to the federal government for final approval. The increase in electricity prices will come into effect immediately after it is approved by the government.

The distribution companies (Discos) would recover Rs159 billion from consumers during the period of six months (October 2023 to March 2024).

The revised rate will be applicable on all customers.

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Inflation goes up as people feel effects of fuel price hikes

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Inflation goes up as people feel effects of fuel price hikes

Food and fuel prices continue fuelling inflation in Pakistan as the Sensitive Price Indicator (SPI) for the week ended September 21 witnessed a 0.93 per increase amid the complete government failure to check the rates.

Read more: Food prices owing to weaker rupee, supply shortages will push Pakistan inflation: ADB

The latest data released by the Pakistan Bureau of Statistics (PBS) shows that chicken price had jumped by 8.49pc followed by petrol 8.51pc, diesel 5.54pc garlic 5.19pc and onion 3.02pc.

At the same time, the year-on-year increase in SPI stood at 38.66pc when compared with the corresponding week of last year.

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Read more: More food inflation as fuel price hikes increase production, transportation costs

The rising inflation in Pakistan urgently needs government intervention and a study of how different governments are dealing with the challenge. Tax on cut on food items is one of methods.

Read more: Fighting the food inflation: From net-zero VAT to supermarkets seeking price cuts

Earlier this week, the Asian Development Bank (ADB) had warned that average inflation in Pakistan will soar to 29.2 per cent caused by supply shortages, continued currency depreciation, import restrictions, and fiscal stimulus for post-pandemic recovery.

Meanwhile, the rising food prices shouldn’t be a surprise given that the regular fuel price hikes are increasing the production and transportation costs.

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The main reason behind the persistent inflation in Pakistan is devaluation as the rupee had dropped to the record against the US dollar – a trend that is being reversed somewhat amid a crackdown on blacking marketers on hoarders.

However, the exchange rate is still too high, requiring further correction, as the people have also been hit hard for power and gas tariffs as the conditions set by the International Monetary Fund (IMF).
 

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Power tariff hikes: The more you devalue rupee, the more capacity charges you pay

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Power tariff hikes: The more you devalue rupee, the more capacity charges you pay

Devaluation – a process that started under former finance minister Miftah Ismail in late 2017 and late 2018 but gained momentum under the PTI government – is the root cause of inflation shouldn’t be a contested statement as it has made imports even more expensive for Pakistan.

And that’s countries like Pakistan are the worst affected due the rising commodities prices in global market as weaker currencies mean the overall impact is much deeper for them than the rest.

Read more: Rupee collapse is the reason behind all ills Pakistan is facing

This argument was endorsed by none other a high-ranking government official – Power Division Secretary Rashid Langrial who said on Monday that the capacity [charges] payment had doubled after the dollar exchange rate increased from Rs100 to Rs300, thus resulting in skyrocketing electricity tariffs for consumers. 

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