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Consumer sentiment in Argentina improves in September

Staff Writer |
In September, the Universidad Torcuato di Tella (UTDT) consumer confidence index improved from the previous month’s reading of 42.6 to 43.3.

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The index remains below the 50-point threshold separating pessimistic from optimistic sentiment, according to FocusEconomics.

Confidence among consumers has been negatively affected by the reforms that the Macri administration is undertaking, which have led to massive job cuts and a high rate of inflation.

In September, consumers were less pessimistic regarding their view of their own economic perspectives compared to one month ago.

Consumers’ assessment of the country’s macroeconomic situation also improved considerably over August’s pessimistic views. In addition, the sub-index representing consumers’ willingness to make major purchases rebounded over the previous month’s figure.

Panelists surveyed for the LatinFocus Consensus Forecast see private consumption falling 2.0% in 2016, which is down 0.2 percentage points from last month’s forecast. For 2017, panelists expect consumption to increase 2.9%.

In August, consumer prices in the greater Buenos Aires capital area increased 0.2% over the previous month, according to recent data published by the National Statistics Institute (INDEC).

The figure marked a deceleration over the 2.0% increase recorded in the previous month.

INDEC attributed the monthly slight increase to higher prices for food and drink, while prices for housing recorded a decrease. Inflationary pressures remain high due to the steep depreciation of the currency after the removal of currency controls and to the scrapping of utility subsidies.

INDEC did not release inflation figures and announced that it would start publishing year-on-year variations in consumer prices when a base of comparison is available.

Data compiled by the City of Buenos Aires show that in August, inflation decreased for the first time in nearly a year and now stands at 43.5%. The figure was down from July’s 47.2% reading.

Panelists surveyed for this month’s LatinFocus report expect inflation in the Buenos Aires province to be 40.1% at the end of 2016, which is up 0.1 percentage points from last month’s estimate. Panelists estimate that inflation will end 2017 at 21.1%.

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