Argentina's implicit inflation is skyrocketing

Argentina's implicit inflation is skyrocketing

By Martina Mas(

Learn how to calculate Implicit inflation Rates here

In Argentina, implicit inflation rates in the capital markets plays a key role in understanding the country's price dynamics. Given Argentina's history of elevated inflation, economic volatility and current absence of a well-established economic policy plan, monitoring implicit inflation rates has become critical.

Implicit Inflation in Bonds

The average implied inflation rate up to 2026 has been rising steeply since last January. Based on our IAMC dataset, all these rates represent the average inflation expected from the current date until the maturity of the bond. For the current year, the estimated monthly rates range between 6% and 8%. Looking ahead to 2026, projections suggest a slightly narrower range of 4% to 7%.

On the other hand, the annual implicit inflation rate for 2023 exceeds triple digits, even surpassing 150% annually. This number represents the highest figure in 32 years, surpassing the record of 1991 when inflation (measuring by the CPI) had reached 84%. Even more, the last time Argentina surpassed triple-digit annual inflation was in October 1991 when it registered a rate of 102%. Providing an optimistic outlook, anual indicators for 2026 range between 70% and 100%, suggesting a potential moderation compared to the current high inflation levels.

Inflation Associated with Treasury Bills

Often both inflation-adjusted instruments and non-indexed instruments are compared, specifically when they have similar maturity dates. This helps determine the breakeven inflation level, which is a crucial factor in deciding whether to invest in fixed-rate instruments (LETES) or inflation-linked instruments based on expected inflation (LECER).

In recent days, the monthly inflation averages up to May and June 2023 have exhibited an increase ranging between 2 and 3 percentage points above the average recorded during the first quarter of the year. Furthermore, the monthly inflation rate up to July is approximately 1 percentage point higher than the average for the first three months of the year.

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Martina Mas

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Martina Mas

This repository compiles the contributions of the Alphacast team on various current topics in the global economy.


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