Argentina’s annual inflation rate has hit a three-decade high, surging past 100 per cent for the first time since 1991 in a sign of how the country’s government has failed to tame price pressures that have torn across the economy.
Prices rose by 6.6 per cent in February, bringing the 12-month figure to 102.5 per cent, according to Indec, the government statistics agency. That was the quickest pace since Argentina was emerging from a hyperinflation crisis in the early 1990s, and places its inflation rate among the highest in the world.
Tuesday’s data comes at a complex moment for the centre-left administration of President Alberto Fernández, which had hoped to ease financial pressure on voters ahead of a tough election challenge in October.
Polls have consistently shown that inflation is a primary concern among Argentines, followed by corruption and poverty.
Soaring prices have largely been attributed to a bout of central bank money-printing, as well as Russia’s war in Ukraine. The amount of money in public circulation has quadrupled during Fernández’s first three years in office, according to central bank data.
Following the latest figures, Argentina now has one of the highest rates of inflation globally. It is behind only Zimbabwe, Lebanon, Venezuela and Syria, all of which reported triple-digit inflation last year.
Economists had widely expected inflation to remain stubbornly high throughout 2023 and are sceptical of the effectiveness of government measures to tame it.
A state price control scheme known as Precios Justos, or “Fair Prices”, has temporarily frozen the cost of more than 1,700 goods until December. But that has not been enough to cool price rises given the serious imbalances in the Argentine economy. Similar price controls introduced in 2021 were not enough to halt soaring prices, and consumer sentiment has continued to deteriorate.
Earlier this week the IMF called on Argentina to make stronger efforts to address inflation in order to keep its $44bn programme with the Washington-based lender on track.
The IMF warned of “policy setbacks” in the South American country amid a severe drought that has destroyed crops and hurt agricultural exports — an important source of government revenue. Net foreign currency reserves hovered at about $4.2bn in February, according to private analysts.
Buenos Aires has been lobbying to lower the bar on several targets agreed with the IMF last year, asking for the executive board to be more lenient given the war in Ukraine and extreme weather conditions.
Argentina is due to receive about $5.3bn from the IMF this month, pending approval by the lender’s executive board.
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