The former Minister of Economy criticized the national government’s price control measures and explained the phenomenon of “repressed inflation”
By iProfessional
14/04/2023 – 11,37hs
While consultants and economists take it for granted that March inflation would be far from the 3% horizon that Minister Sergio Massa had outlined, Domingo Horse he analyzed “the general orientation of economic policy” and predicted an annual inflation of more than 120%, in the event that the flow of “repressed inflation” that the national government seeks to “contain” emerges.
When asked about the difficulties of the economic management of the Frente de Todos, Cavallo warned that it is possible that the monthly inflation stabilizes “between 6% and 7%”.
In this sense, the former Minister of Economy asked the ruling party for “an effort” so that the ipent up inflation (originated according to Cavallo by the policies of control of prices and the pressures exerted by the Government).
From the economist’s perspective, this is an essential condition “so that the economy stabilizes.”
What Cavallo said about fuel prices and rates
“They have arranged that from now until August fuels rise 4% per month and inflation is 7%,” Cavallo explained in statements to LN+.
“It means that those prices at a rate of 2% per month,” he explained.
“After what will happen? They’re going to have to authorize a much larger increase. It is the same thing that happens with all the rates of the services that have been delayed. All that is repressed inflation,” considered the former head of the Palace of Finance.
“I would say that since they do not have the possibility of lowering the inflation rate because the general orientation of the economic policy and the organization of this economy makes it impossible for them to believe in the government that it is going to be capable of stabilizing in a genuine sense, so that they at least take advantage of this relatively high inflation so that all that repressed inflation emerges and that relative prices remain more in balance,” reasoned Cavallo.
The measure, according to the former head of the Palacio de Hacienda, would favor “lto eventual stabilization of the economy“. First of all it would be necessary, insisted the former minister, “to release prices”.
When asked how much inflation would reach if they let the repressed inflation “outflare”Cavallo calculated an annual value “greater than 120%”, taking 6% or 7% per month as a reference.
