2022 ended with the highest inflation in 31 years. The slowdown in recent months prevented the 100% barrier from being surpassed, but the final figure was close to that figure: according to private estimates scored 95% and exceeded the 83% of 1991, the year Convertibility was implemented.
The inception of the 1 to 1 and the reforms it brought with it raised inflation from 1,343% in 1990 to 17.5% in 1992. Between 1993 and 1998, during the administration of Carlos Menem, the annual inflation would have been below single digits and between 1999 and 2001 -already with the governing Alliance and the recession through- there was deflation.
After the 2001 outbreak, the end of Convertibility and devaluation, the index rose to 40% in 2002, when Eduardo Duhalde ruled. Inflation was growing in the three administrations of Kirchnerism, while the INDEC intervened to start tracking the indices. It ended with the second presidency of Cristina Kirchner real inflation of 26%, according to private measurements. The following inflation record corresponds to Mauricio Macri, with the 53.8% in 2019.
Already under the presidency of Alberto Fernández, in 2020 and as a result of the pandemic, inflation fell to 36.1% and rose to 50.9% in 2021. In the past year broke the 31-year-old record with 95% matriculation.
With these data, President Alberto Fernández accumulates 300% in his first three years in office. And if predictions of 100% inflation for 2023 come true, the Frente de Todos will end its administration with accumulated inflation above 600%.
The ruling party is playing its electoral chances to get the 2023 index closer to the 60% set in the Budget Law than the 99.7% expected by the Central Bank’s Survey of Market Expectations (REM). To achieve this goal, the promise of Minister Sergio Massa that inflation will start with 3% from April.
But that goal seems more than widespread. For now, after December’s inflation estimated at between 5.5% and 6% -the official data will be released on the 12th of this month-, analysts predict that January’s record could be closer to 6%. The list of expected increases -prepaid, utilities and fuel, among others- They’ve already put a high floor on the figure for the first month of the year.
The consultancy company LCG anticipates a 2022 with inflation at 95%, the same as economist Fausto Spotorno, while for C&T the closure was 97%
Spotorno estimates a record slightly above 6% for December. “January is a strong month, it could exceed 6% and reach 100% in 2023“.
The REM inflation forecast for January is 6.1% in December and 6% in January. The Latin Focus survey, which collects the forecasts of more than 60 banks and consultancy firms, indicates that “inflation to accelerate further in 2023, driven by peso depreciation and monetary financing of fiscal deficit“.
The dollar will play a central role in shaping inflation for the new year. In 2022, both the official dollar and the parallels lagged prices, lagging by more than 20 percentage points.
But in the last quarter of 2022, the official rate of devaluation of the dollar exceeded inflation. That changed at the end of the year. “In the last few wheels it was observed a marked slowdown in creeping peg. From above 110% annualized it fell below 90%”, they report from GMA Capital.
With elections looming, ruling parties tend to lag the exchange rate. GMA points out that “if we take the election average since 2003, we see that In the ten months preceding the election event, the real exchange rate appreciated by an average of 7.4%“.
“Continued appreciation of the exchange rate creates incentives to accelerate imports and delay exports. Therefore, the government should further tighten inventories to minimize the foreign exchange drain. In this way, not only could there be upward pressure on the financial dollar, but the level of activity would also suffer,” apply from GMA.
In the final days of 2022, the blue and the financial dollar set nominal records for the year, with blue at $359, although it finally closed at $350 on the last business day, while cash with liquid finished at $344 and MEP at $328.
With the tight exchange rate on imports, analysts underline that with these the parallelism increases could become the reference dollars for the import sector and thus put pressure on inflation at the start of the year. “This increase could affect prices as usual in months after a sharp leap nominally financial and blue,” said Juan Pablo Albornoz, economist at Invecq.
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Source: Clarin
