Argentine inflation rises and approaches 100% at the end of the year

Argentine inflation for the month of October was 6.3%, as announced this Tuesday (15) by Indec (National Institute of Statistics and Census). The index accumulated in the year, in its tenth month, is 88%.

Private consultants estimate that the country will close the year with a figure close to 100%. Argentina has the second highest inflation in the region, second only to Venezuela, at 119.4%.

The products that had the most increases in the period were food, clothing and services.

Although the country has implemented, a few days ago, a new temporary freeze, the Fair Prices program, which will last for four months, the measure was not able to contain the increase in products.

Argentina has already made use of the resource this year on two other occasions, with two editions of the Care Prices. This time, there are 1,500 products that cannot be increased in the coming months.

Jerónimo Montalvo, from consultancy Empiria, says that, at this time of the year, “inflation has been growing by inertia, and we already considered this increase due to the scheduled readjustments of gas, electricity and transport services”.

In addition to the Fair Prices program, the Minister of the Economy, Sergio Massa, announced in recent days some measures to try to contain the loss of the population’s purchasing power.

One of them was the 15.6% increase in pensions, pensions and social assistance plans. In addition, a bonus of 10,000 Argentine pesos (around US$60 or R$330) was approved for the months of December, January and February for people earning less than the minimum wage, and one of 7,000 pesos (around US$42 or R$230) to those earning the equivalent of two minimum wages.

“Inflation is a big problem for most Argentines, but especially for retirees or those who receive pensions and assistance from the state. We are offering protection to them,” Massa said.

Even so, in recent weeks, there have been almost daily demonstrations in front of the Ministry of Economy and other ministries in downtown Buenos Aires, asking the government for more social plans to face the moment.

During the week, there was a 24-hour stoppage by doctors, nurses and assistants at public hospitals in Buenos Aires. Professionals walked dressed in white uniforms from the Obelisk to Plaza de Mayo. The strike is worrying, at a time when the country is experiencing a rise in hospitalizations related to the arrival of the new variant of omicron, Covid-19, and an increase in cases of influenza.

The week before, there was a stoppage of public transport. The union of the categories plan a new strike for the coming weeks, in case their wages are not readjusted above inflation. One of the most worrying categories is that of truck drivers, who achieved a 107% readjustment, but which was not renewed after August.

For the deputy economy minister, Gabriel Rubinstein, Argentina runs the risk of hyperinflation “if we do not continue to fight for the reduction of the fiscal deficit and the monthly inflation data”.

Rubinstein, for now, rules out a currency devaluation, although in practice it is already happening. One of the signs is the difference between the values ​​of the official dollar (160 pesos) and the so-called blue (parallel), which is at 297 pesos.

Rubinstei defended the policy of freezing prices, despite criticism from several economists and private consultancies.

“It is a great tool to try to slow down inflationary inertia. It is an important piece to improve the country’s economic health in the coming months. The intention is clearly not to eliminate inflation, but to prevent it from harming other aspects of the macroeconomy, in addition to help people who suffer the impact of high prices”.

The need to increase social spending to contain popular discontent puts negotiations with the IMF (International Monetary Fund) at risk for an agreement to pay the US$ 44 billion debt that Argentina has with the fund.

What had been agreed upon was that the government should make adjustments to the economy and reduce the fiscal deficit and inflation. Little of this is being fulfilled, which could lead to a new impasse between Alberto Fernández’s government and the entity.

Politically, carrying out the adjustments requested by the IMF will have electoral consequences, since the government, discredited and with a popularity below 20%, begins in a few weeks to make its choices for the candidate that would contest the 2023 presidential election. government, suggest that Fernández himself, his deputy, Cristina Kirchner, the Minister of the Interior, Wado de Pedro and the governor of the province of Buenos Aires, Axel Kicillof, former minister of the economy, be nominated.

The opposition, despite the tide in favor, still faces internal frictions to define its candidate, who is, for now, between former president Mauricio Macri, with more chances, the head of government of the City of Buenos Aires, Horacio Rodríguez Larreta, and former security minister Patricia Bullrich.

In the last five months, Fernández has lost seven ministers, most from the political field. While he defends a moderate profile in the portfolio, Cristina’s will prevailed, who supported Massa so that, among other things, he puts the negotiation with the IMF in the background and contains popular dissatisfaction through social spending programs.