Argentina recorded inflation in August that reached 12.4% compared to July and 124.4% on an annual basis, a consequence of the depreciation of the peso last month and a level that is the worst in the last 32 years; the problem throws heavy shadow on the election campaign ahead of the presidential and parliamentary elections in October.

The index, announced yesterday Wednesday by the national institute of statistics (INDEC), doubled compared to July (6.2%). This is the worst performance since 27% recorded in February 1991. It is also the first time this indicator has been in double digits on a monthly basis in 21 years.

Inflation in Latin America’s No. 3 economy has now reached 80.2% cumulatively since January, meaning that by the end of 2023 it will have far exceeded 94.8% in 2022, already the worst performance in 32 years.

The last time monthly inflation in Argentina was in double digits was in April 2002, when the country was trying to recover from a costly period of fixed exchange rate (1 peso to 1 dollar) and simultaneous deregulation of the economy.

That decade had initially ended the hyperinflation of 1989-1990 (when the index exceeded 2,000%), but ended in a banking crisis, a deep recession and a social explosion, episodes with 39 deaths in late 2001.

The surge in inflation in August was predictable. The day after internal party votes to nominate the parties’ candidates for the August 13 presidential election, the government of President Alberto Fernandez proceeded with a major devaluation of the currency, the peso, against the dollar by 20% (now the rate is at 365, 5:1 against the dollar). Argentina’s currency has been on a gradual but unstoppable devaluation for two years.

This was followed, in late August, by price fluctuations and sporadic shortages, before economic agents, especially suppliers, readjusted them taking into account chronic inflation on the one hand and the new exchange rate on the other.

“August was one of the worst months of the last 30 years in terms of the economic process,” summed up yesterday Wednesday the Minister of Economy, Sergio Massa, who is also the candidate of the governing faction (center-left) in the presidential elections of October 22, which are announced ambiguous.

The minister attributed the poor results at least in part to “the imposition of devaluation [του νομίσματος] from the International Monetary Fund”.

The IMF has set Argentina fiscal targets and demanded the restoration of foreign exchange reserves as part of an agreement signed in 2022 to refinance the country’s debt, a legacy of the $44 billion loan granted in 2018 by the Washington financial institution to then-Gov. President Mauricio Macri (right) in Buenos Aires.