Argentina Prices Surged by Most in Two Years After Peso Plunge

(Bloomberg) -- Argentina’s monthly inflation surged the most in at least two years in June after a currency crisis sent the peso plunging to a record low.

Consumer prices rose 3.7 percent from a month earlier, according to the nation’s INDEC statistics agency. The median estimate of economists surveyed by Bloomberg was for a 3.6 percent increase. Core inflation rose 4.1 percent, up from 2.7 percent in May.

It was the highest print since INDEC went through a leadership overhaul after President Mauricio Macri’s 2015 election to reestablish the credibility of its statistics. Argentina in 2013 became the first nation to be censured by the International Monetary Fund for not providing accurate inflation and growth data. The Fund lifted the censure in November 2016.

In the 12 months through June, prices increased 29.5 percent, in line with economists’ expectation of 30.0 percent for the end of 2018, according to the latest central bank survey. At beginning of the year, analysts surveyed by the central bank expected inflation of 19.4 percent this year.

Food and drinks, furniture and medical products led the surge in consumer prices last month.

The worsening inflation figures, in addition to faltering economic activity, suggest that Argentina may fall into a recession this year. Most economists and government officials now forecast two quarters of contraction followed by a rebound in the fourth quarter.

©2018 Bloomberg L.P.