The Argentine inflation closed August at 12.4%, the highest since 1991, as people juggle to make ends meet.
The national statistics institute Indec reported this Wednesday the data of the Consumer Price Index (CPI), which accumulates 124.4% in 12 months and 80.2% so far this year. It is among the highest in the world.
Monthly inflation had not been this high since February 1991 (27%), when it adopted a process of fixed convertibility of the peso with the dollar. The last time the monthly CPI reached double digits was in April 2002 (10.4%), just after the country abandoned that 1 to 1 fixed parity model.
The item that increased the most was food and non-alcoholic beverages, with 15.6%, “product of the increase in meats and derivatives and vegetables, tubers and legumes.”
“There is nothing”
Meat, essential in the Argentine diet, experienced increases of more than 30%. Regular ground beef, which is the most popular, rose 39.4% in August, according to the report. Other finer cuts also follow that line.
“There is nothing, there is no money to save”said Karina Sablich, a school teacher, while shopping at an open market in Buenos Aires.. “We live from day to day, I work all day because one position alone is not enough for us.”
The Minister of Economy, Sergio Massa, who is seeking power as the ruling party’s presidential candidate, said shortly before the indicator was known that “August has been one of the worst months in the economic process of the last 30 years, the product of an imposition by the International Monetary Fund.”
It refers to the 21% devaluation of August 14, agreed precisely with the IMF to unblock disbursements of the credit program with the organization for US$ 44,000 million.
And a barrage of price increases followed, a few weeks before the presidential elections on October 22, in which opposition candidates promise to apply a strong fiscal adjustment to stabilize the economy.
The market expected double-digit inflation. The stock market closed positively (2.84%).
“A shame”
Health reported an increase of 15.3%; home equipment and maintenance, 14.1%; and transportation 10.5%.
“A shame”wrote conservative candidate Patricia Bullrich. “It is not just inflation, it is the number that summarizes the tragedy that Massa and Kirchnerism leave us.”
The economist Victor Beker, director of the Center for Studies of the New Economy at the University of Belgrano, said that “an anti-inflationary plan is necessary.”
“But obviously until December 10 it will not exist”, Explain. On that date the new government is installed.
Argentina already had two episodes of hyperinflation in 1989, of 3,079% annually, and 1990, of 2,314%.
The country then adopted the model of “convertibility”supported by privatizations, deregulations and a total opening of the economy.
Annual inflation fell to single digits but the increase in imports increased the foreign currency debt, ruined the industry and caused a serious recession that precipitated the political crisis of 2001 and the devaluation of the peso in 2002.
Stretch the money
This Wednesday, Massa announced tax benefits for up to the equivalent of US$50 per month on the purchase of basic products for more than nine million workers and retirees.
Days ago, he also granted an increase in the minimum amount of income for the payment of income tax, which, he said, will improve the pocket income of Argentines by up to 21%.
Suspicious, people stretch money as much as they can.
“There is total disbelief and we continue despite everything, knowing that for now things are not going to change”said Sablich. “That’s the saddest thing about being in this country right now: the uncertainty that we don’t know how we’re going to get out, who’s going to get us out.”
The September FocusEconomics report, which brings together more than 40 bank and consulting analysts, estimates that inflation will close in 2023 above the previous year, “propelled by the collapse of the peso amid the monetary financing of the fiscal deficit”, that is, financing through monetary issue.
“A faster-than-expected depreciation of the peso and fiscal generosity ahead of the October elections are key upside risks.”
Source: AFP
Source: Gestion
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