Poverty: why the prospects for this year don’t look better

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The evolution of poverty during the past year is characterized by two periods well differentiated.

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During first quarter In 2022, total household income (FTT) in the bottom four deciles of the distribution grew, on average, about 63% compared to the first quarter of 2021, while the total basic basket (CBT) under which poverty grew by 43%. This led to a poverty rate in that first quarter of 34.5%.

As of the second quarter, the situation has reversed, and year-over-year growth in CBT has accelerated to 64%, while ITF growth in the bottom four deciles of distribution has grown by nearly 59%. This income and basket dynamics led to an increase in the incidence of poverty which reached 38.4% in the second quarter and translated into poverty for the first half of 2022 of 36.5%.

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During third quarter of 2022 there was a new acceleration of inflation of CBT which increased by 74% year-on-year and which was partially offset by an increase in overall household income as measured by the Permanent Household Survey (EPH) which includes the Christmas bonus in that quarter. That meant a third-quarter poverty rate of about 37.7 percent (estimated with EPH microdata released this Friday).

The situation during the fourth quarter of 2022 was no better. CBT has increased at a 97% annual rate, and the partial information we have on revenues suggests they have not matched this increase (registered private sector wages grew 93.8% year over year in December).

Labor market data indicates that the jobs that grew in the latter part of last year are those in informal workers and single tax payerswho am who they are in the bottom deciles of the income distribution.

It is therefore unlikely that total household income grew at a rate similar to that of CBT due to an increase in the number of income earners in the household. On the other hand, EPH for the fourth quarter of each year does not capture the Christmas bonus and this generally means that the poverty rate in that quarter is higher than in the third. These characteristics suggest it the poverty rate for the third quarter would be a low for what it would be for the fourth and most likely the incidence of poverty for the second half of 2022 that INDEC will post on March 30 is about 40%.

The outlook for 2023 is not better. The government fails to control inflation, which is already hitting the triple-digit annual mark, and economic activity entered a slowdown in September last year which will most likely turn into a recession in the first quarter of this year. ‘year. In these conditions the incidence of poverty is unlikely to decrease.

Source: Clarin

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