Argentine inflation gains momentum again and the Peronist government imposes more price controls

The inflation, one of the endemic problems of the Argentine economy, regained strong momentum in September, thus breaking its downward trend registered in the previous five months.

According to data released this Thursday by the National Institute of Statistics and Censuses (Indec), the consumer price index advanced 3.5% in September compared to last August and registered a year-on-year increase of 52.5%.

In the first nine months of the year, prices accumulated a 37% rise, exceeding last year’s total inflation (36.1%).

New price controls

Food and non-alcoholic beverages were once again the segments “with the highest incidence” in all regions of the country, with an advance of 2.9% in September, which implies an increase of 36.6% so far this year.

In a very complex context for the Argentine economy – where high inflation is compounded by a scenario of recession and employment and income problems exacerbated by the pandemic – the Peronist government of Alberto Fernandez It has adopted some measures aimed at containing food prices.

The last of them came this Wednesday, when the Executive met with producers and wholesalers to freeze the prices of more than 1,200 products of the “basic basket” until next January 7.

“This will be the first Christmas that will almost be with a very attenuated impact of the pandemic, there will be meetings and encounters, which has not happened in the last two years. Let’s try that this is not frustrated by an escalation in prices ”, the Argentine Secretary of Commerce, Roberto Feletti, assured Radio El Uncover.

“At this time, the fundamental thing is to stop the ball and ensure a quarter of full consumption,” added the official, who underlined the “favorable” position of companies in the food sector.

More inflation at the end of the year?

Private economists who consult the Central Bank month by month for their expectations report project that inflation will be 48.2% this year, widely exceeding the rate of 36.1% in 2020.

However, these experts’ forecasts for September (2.8%) were well below the monthly advance reported by Indec (3.5%).

In any case, the experts consulted by the Central Bank foresee an acceleration in inflation from December to March 2022, when it would touch 3.7%.

In this latest report, economists also raised their estimates for 2022 (46%), after the ruling party suffered a severe setback in the legislative primaries, motivated, according to Vice President Cristina Fernández de Kirchner, by fiscal moderation applied in the first semester of the year.

After those elections, which caused changes in the cabinet, the Government announced several important economic measures, such as an increase in the minimum, vital and mobile salary, an early retirement plan and a bill to convert social programs into genuine work.

Argentina, which does not have access to international credit markets, will have to resort again to monetary issuance to finance these and other similar measures taken after the November legislative elections, which would put greater pressure on prices, according to The experts.

Asked about the difficulties of the Executive to contain inflation, the Minister of Economy, Martín Guzmán, assured in an interview in the 57th IDEA colloquium that “it is not enough to reduce the monetary issue” and opted for “attacking the multiple causes” that cause the increase in prices.

In this sense, Guzmán reiterated the importance of obtaining more international currencies -Argentina has reserves of US $ 42,848 million-, maintaining an expansive spending policy “reducing the deficit” and strengthening the State in its role as “coordinator of expectations”.

“If we all think that the rest are going to raise prices and the replacement cost of what we need to produce is going to rise, we will probably raise prices more. That is why it is very important for the State to play a role so that there is a reduction in the inertia component of the inflationary process, “he said.

According to the Budget 2022 bill, the Argentine government expects inflation to rise 45.1% this year, a rise in prices that would slow to 33% in 2022.