Life in a high-inflation country is nothing new to Yanina: when she opened a small supermarket in a working-class neighborhood of Greater Buenos Aires ten years ago, the annual inflation rate was over 25%.

Despite the fact that this number grew over the years until it doubled, people managed to manage and treat themselves, he says.

“Four of the ten products they bought were basic,” he tells BBC Mundo.

But as price increases have accelerated, doubling in one year from about 50% a year to 95% by 2022, and well past the triple-digit barrier this year —in April, the year-on-year figure rose to 108.8%– your customers’ habits changed.

“Now they only have basic products, they don’t buy the rest anymore,” he says.

Millions of Argentines are not even able to meet their basic needs. According to data released by the National Institute of Statistics and Censuses (Indec) at the end of March, 4 out of 10 Argentines are poor.

And with children, the situation is even more dramatic: more than half of children under the age of 14 (de 54.2%) lives below the poverty line, equivalent to nearly 6 million children.

Economists expect this figure to continue to rise this year as a result of the new impetus inflation received in March and April when it reached 7.7% and 8.4% monthlyrespectively their highest since the economic crisis of 2001/2, the worst in the country’s history.

Due to the acceleration of prices, Argentina even achieved an unfortunate record, through surpassing Venezuela for the first time in decades in monthly inflation (although the Venezuelan year-on-year rate is still nearly five times higher than Argentina’s).

Inflation is a phenomenon that has a disproportionate impact for those who have lesssince the prices that are rising the most are those of food, which are the biggest expense for working families.

But in addition, the sectors with the lowest incomes are unprotected against rising prices because they often have informal jobs, which are not covered by an instrument that has been used for the past twenty years to protect the population against inflation: parity.

These are agreements between trade unions, companies and the government to adjust wages to the rise in prices.

But those who hold unregistered jobs (“in the black”)—constituting 35.5% of Argentina’s workforce, according to INDEC—have no parity.

Neither do the self-employed, the economic sector that has grown the most in recent years.

According to a study by the Institute of Labor and Economic Development Studies (Ielde), based on INDEC data, 8 out of 10 new jobs created after the coronavirus pandemic were unregistered salaried positions or non-professional self-employed.

In 2022, both groups were represented more than 50% of the workforce total (that is, today they are more than the number of registered employees in a dependency relationship).

formal but poor

But the truth is that being a “blank” employee nor does it guarantee protection against inflation in Argentina.

Because although there is work – unemployment is low, 6.3% according to INDEC – salaries are low.

The minimum wage in April was 80,342 pesos per month (about US$170 market).

Besides the fact the lowest salary in South Americaafter the Venezuelan, was insufficient to cover a family’s minimum expenses, as April’s basic basket (including the necessities for two adults and two children) was 191,228 pesos, which is more than two minimum wages.

And that doesn’t even include housing costs.

Cinthia had to move in with her parents because she couldn’t pay the rent, which grew with inflation.

Cinthia, 37, who went into Yanina’s shop to buy some cookies for her godson, tells BBC Mundo that she has a steady job as an administrator in a maternity and children’s hospital.

However, he claims that he had to go back to live with his parents because he could not continue to pay the rent, which rose with inflation.

“I couldn’t support myself on my salary. And my parents weren’t enough with their pension either,” he says.

Even if they all live together, they won’t have enough to make the Sunday roast, he points out. Now they eat it once a month.

He also can’t buy his godson his favorite candy when he comes to visit because “the prices are skyrocketing.”

“We always had inflation in Argentina, but before salaries beat it,” he says. “Now even with work you are poor”.

Registered workers lost almost 20% of their purchasing power over the past five years, and unregistered workers lost almost double, according to the consultancy Labor Capital Growth (LCG).

Meanwhile, the latest research from the Argentine Social Debt Observatory, published by the Argentine Catholic University (UCA) in late 2022, found that nearly one third of all workers are poor.

new ticket

Amid the inflation escalation, the Central Bank of the Argentine Republic (BCRA) announced the launch of a new bill of 2,000 pesoswhich will be the one with the highest denomination.

Although the announcement was made in February, it’s still not clear when it will enter circulation (Mint sources told local press it would be available “in the middle of the year”).

For many Argentines, such as Cinthia, the new ticket falls short.

“Today, $2,000 is the minimum you need to leave your house to buy something. With this inflation, they should be issuing $5,000 or $10,000 bills,” he says.

He also points out that with prices rising so quickly, it’s impossible to have a reference how much things are worth

“I have no idea how much I’m going to pay for these cookies. Yesterday they had one prize and maybe today the other,” he says.

A report from the consultancy firm Focus Market on the note that is currently the highest denomination in Argentina (the $1,000) revealed how much purchasing power it has lost since it entered circulation in November 2017.

According to work, today worth nearly 18 times less than it was worth when it launched. Put another way, what is bought today with a $1,000 bill in 2017 can be achieved by paying just $56.18.

BCRA A $2,000 bill will be launched this year, but with inflation over 100% within a year, it will be worth half or less.

The most prosperous sectors

Even Argentines with the best salaries (and the best parity) are suffering from the rising cost of living.

Not only because – as the famous saying of former president Juan Domingo Perón goes – “while prices go up in the elevator, salaries go up the stairs”, that is, they are always behind.

Also because, even though their wages rise with inflation or even above, the taxes on that income they increase even more.

This is due to a fiscal bias caused by the inflationary effect: the government periodically raises the floor from which income tax is paid (to reflect the salary increases agreed in the parities), but does not change the scales, so that more and more employees are paid the maximum rate35%.

Guillermo, a 67-year-old logistics expert, who worked as a cargo manager for airlines for three decades and retired two years ago, decided to continue working as a consultant, not only to maintain his standard of living, but also to help his children become increasingly suffocated by these difficulties.

“I started this year pay for my granddaughter’s schoolBecause otherwise they would have to change it. I started the year paying $25,000 in fees and in four months I’m already paying $50,000,” he says.

Speaking to BBC Mundo in a hypermarket near the wealthy Nordelta neighborhood, in the northern suburbs of Buenos Aires, he revealed that even with a salary and a pension, he had to change some habits because they were getting too expensive.

“The good thing is that I don’t smoke anymore. I used to smoke cigars but they are imported and I stopped buying them because of the value. He smoked a pack of 10 a day and paid $300. They are now worth $4,200. I couldn’t go on.”

Guillermo began paying for his granddaughter’s private school and had to put aside his fondness for cigars.

The massive collapse in the value of the peso against the dollar is the flip side of inflation.

Five years ago it took 21 pesos to buy US$1. Today, it costs about $470 on the parallel or “blue” market, the only one available to the majority of Argentines since they were imposed “traps” on the sale of the US currency, to try to preserve the few currencies left in the Central Bank.

For Argentines with a better economic position, the spray of their salaries measured in dollars between 2015 and 2022 fell 86%according to Focus Market – it not only limits how much imported products they can consume, but also slows down their foreign currency spending, such as buying cars, which are valued at the “blue dollar” price.

“We used to update the car from time to time, but now it is unreachable. We don’t have that option like other years. And now we travel through Argentina instead of to other countries,” says Jesica, a 33-year-old psychologist and mother of two young children, of the changes she has had to make.

Despite these limitations, she considers herself “one of the lucky ones” because both she and her husband, as independent employees, can adjust their fees and still maintain their lifestyle and also buy a few dollars each month to save their savings.

Jesica and the rest of the interviewees told BBC Mundo that they believe the economic situation it will become even more volatile in this election year full of political uncertainty.

Both the president, Alberto Fernández, leader of Peronism, and his predecessor and rival, the centre-right Mauricio Macri, and his predecessor, the current vice-president Cristina Fernández de Kirchner, she barred from presenting herself as candidates, and it will not be known until the end of June who will compete in the open primary in August.

While it has been determined who will take over the reins of the country in December, the Argentines They pray to be able to make it to the end of the year without repeating the great debacles of recent decades, such as the hyperinflation of 1989/90 or the economic and social explosion of 2001/2, the memory of which still hurts.