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Argentina inflation undershoots forecasts with 3.3% rise in May

06/16/2021 | 03:42pm EDT

BUENOS AIRES, June 16 (Reuters) - Argentina consumer prices rose 3.3% in May versus a month earlier, the country's statistics agency said on Wednesday, undershooting analyst forecasts and giving a small reprieve to the government as it tries to rein in rampant inflation.

The South American country, which has struggled underneath high inflation levels for years, saw rolling 12-month inflation clocked at 48.8% in the month. Prices were up 21.5% in the first five months of the year.

Argentina is in talks to renegotiate its debts with the International Monetary Fund (IMF) and the Paris Club of lenders while battling to emerge from a long recession exacerbated by the COVID-19 pandemic.

Analysts polled by Reuters had predicted an average 3.6% rise for the month after a 4.1% increase in April, with price increases driven by food and beverage costs.

"Inflation in May experienced a significant deceleration," the Economy Ministry said in a statement after the result, adding it was lowest since the end of last year.

Economists and officials have grown concerned about runaway inflation expected to near 50% this year, with President Alberto Fernandez explaining Argentina was a "punk nation" where uncertainty led to a spiral of rising prices.

Analysts say prices could cool in the second half, though inflation remains elevated and will end 2021 well above initial government targets of just 29%.

"It represents a decrease compared to previous months, although inflation remains high," said Joaquín Waldman, an economist at the consulting firm Ecolatina, adding "we expect it to break below 3% per month in the second semester."

(Reporting by Jorge Iorio and Hernan Nessi; Writing by Adam Jourdan; Editing by David Gregorio)

© Reuters 2021
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