BUENOS AIRES, Sept 9 (Reuters) - Argentina's monthly inflation is expected to have slowed in August due to a moderation in food prices even though the annual rate will persist above 33%, a Reuters poll of economists showed.
The annual measure likely remained elevated as the comparison base in the same period of last year is still low, but this effect will begin to wear off by year-end, analysts said.
While the deceleration is set to benefit consumers, the resulting loss in companies' pricing power may further hurt firms already facing a weaker economy which is denting President Javier Milei's popularity in opinion polls.
The Consumer Price Index (CPI) likely rose 1.7% last month after a 2.1% rise in July, according to the median estimate of 21 economists polled from September 2 to 8.
On the year, inflation is forecast at 33.6% in August, barely changed from 33.8% in the previous month. Official data are due on Thursday.
"Although food price inflation decreased in August compared to July, it may have remained slightly above average, according to our monitoring," said Jose Maria Segura, chief economist at PwC Argentina.
"Monetary policy has been restrictive and we expect inflation to begin falling with somewhat greater momentum during the second half of the year," he added.
Despite the government's initial success in bringing down inflation from nearly 300% at the start of 2024, it will likely remain one of the highest rates in the world into next year.
Meanwhile, many sectors of the economy are suffering from falling demand due to Milei's prolonged austerity drive and worries about the future of his reform program amid strong pushback in Congress.
The downturn is exacerbated as small goods-producing companies find it more difficult to raise prices enough to sustain their operations, leading to business closures.
Some economists say the government should boost public spending to reactivate demand. However, most analysts instead point to Argentina's high wage costs related to decades-old labor laws, especially in services.
Since taking office in 2023, Milei has pushed partial changes in work regulations. Market players expect these will be deepened after next year's presidential vote despite rising insecurity in government and manufacturing jobs.
"The downward trend in goods prices is stronger than that of services and this is a problem because it squeezes corporate margins, given services reflect wages," said Fausto Spotorno, director at economic advisory firm Orlando J. Ferreres.
(Reporting and polling by Gabriel Burin and Hernan Nessi; Editing by Ross Finley and Gareth Jones)