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Unstoppable inflation in Argentina reaches 108.8% per year and exceeds worst forecasts

Unstoppable inflation in Argentina reaches 108.8% per year and exceeds worst forecasts

Inflation does not let up Argentina and advances above the projections managed by the Central Bank, after being located last April at 108.8% year-on-year and 8.4% monthly, 4.5 and 0.9 points more than in March, respectively.

Consumer prices reported this Friday by the National Institute of Statistics and Censuses (indec) beat the forecasts of the analysts who prepare the monthly report of “Survey of Market Expectations” published by the monetary authority, which marked a monthly increase of 7.5% for the fourth month of the year.

The Central also stipulated that for the rest of the year inflation would reach 126.4%, although that number could easily be exceeded in less than 8 months if the country’s monetary imbalance maintains that rate, a problem that Argentine President Alberto Fernández addressed. this Friday.

We have a very serious problem with inflation. In April we had a currency run that took the dollar from 460 to almost 500 pesos. Any rise in the dollar affects prices and there is an escalation, then the dollar falls and prices do not”, Fernández said in statements to Radio 10.

At the end of last month, the US currency shot up to 495 pesos in parallel markets, generating uncertainty in merchandise because it prevents the population from understanding the real values ​​of each product, since they turn to the ‘blue dollar’ of the black market before the restrictions to access the official.

Many criticized me for what I called ‘self-constructed inflation’, ‘psychological inflation’, which is not in the consumer, but in the small merchant”, pointed out the president.

One of the Government’s measures to alleviate this problem are the price agreements signed with supermarket businessmen, by which amounts are set that cannot be modified within a specific period.

The second problem is that there are more than 400,000 outlets and there is no army that can control that. Neighborhood supermarkets (small and medium-sized stores) never entered into price agreements. That makes fighting inflation much more difficult.”he claimed Fernandez.

The relationship with the IMF

Besides, Argentinawhose economy also suffers the fluctuations of the electoral climate -this year it will hold presidential elections-, continues to carry debts with the International Monetary Fund (IMF), which in 2022 refinanced its debts for US$ 45,000 million through an Extended Facilities Agreement , which affects the economic maneuver margins available.

After the fourth review of the Fund, which allowed the South American country an immediate disbursement of close to US$ 5.4 billion, the body considered it necessary to apply “a stronger policy package” to achieve stability in the face of rising inflation affected by severe drought and exchange rate setbacks.

Achieving the primary fiscal deficit target of 1.9% of GDP by 2023 remains essential to support disinflation and reserve buildup, ease financial pressures, and strengthen debt sustainability”, explained the IMF in a statement in early April.

On the fiscal front, the accumulated primary deficit of Argentina in its first quarter of the year it tripled compared to the red for the same period in 2022, exceeding by 56% the deficit target included in the refinancing agreement signed last year with the IMF.

The Government attributed this dismal result to the “worst drought in decades” that affected “notably” the collection associated with foreign trade taxes, with a decrease in the quarter of 350,000 million pesos (US$ 1,550 million / 1,407 million euros) with respect to the income from export rights initially projected.

Regarding the evolution of economic activity, the analysts consulted by the central bank they foresee that this year the gross domestic product (GDP) will contract by 3.1%, compared to the growth of 5.2%, according to official figures, registered in 2022.

Likewise, experts project that GDP will contract another 0.2% in 2024 and grow 2.5% in 2025.

Source: EFE

Source: Gestion

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