Peronist president of Argentina now plans national food company to curb inflation

The Peronist government Alberto Fernandez plans to create a national food company in the umpteenth attempt to curb inflation after the failure of the price control policy in Argentina.

Government spokesperson Gabriela Cerrutti announced that this initiative will allow small and medium production of vegetables to “reach more economically, cheaper, to different households.”

The announcement comes days after the National Institute of Statistics and Censuses (INDEC) reported that January inflation was 3.9%. In 2021 the cost of living increased 50.9% despite the fact that in the last months of last year the government had implemented a price control system through agreements with business chambers from different sectors.

Inflation in Argentina is among the highest in the world and in the region it is only surpassed by that of Venezuela.

The most alarming data in the first month of the year was that seven of the 12 reference items with which the consumer price index is compiled registered increases of more than 3%.

Analysts agree that the price control policy is like giving an aspirin to a terminal patient since the problem of inflation in Argentina, which dates back to the early 2000s, requires correcting macroeconomic imbalances.

“Despite the extensive and increasingly extensive formal and informal price control mechanisms, high inflation is now deeply rooted and rooted in the price and wage formation mechanisms,” warned economist Alberto Ramos, from the Goldman Sachs consultancy. .

“This testifies to the significant imbalances of macroeconomic policies and the failure of the monetary authority to ensure monetary control and achieve low and stable inflation.”

Cerrutti assured that “the government is looking for strategies, such as that small producers can distribute their merchandise or that seasonal prices are decoupled from international ones.” He did not elaborate on the national food company or when it would come online.

The official strategy, according to the official, also requires that the agreement with the International Monetary Fund for the refinancing of the debt of US$ 44,500 million contracted in 2018 to achieve “certain financial stability”. In practice, Argentina uses the dollar price as a reference to set prices and the US currency exceeded its historical value in the informal exchange market due to the risk of a new default.

The government and the agency reached an agreement in principle at the end of January, but details are still being negotiated. In addition, the refinancing of the debt requires the approval of Congress and it is not yet clear that the ruling party will obtain the necessary votes.