Inflation has once again put Argentina in an awkward position and put it down one of the worst places in the world. Is that the 7.7% monthly increase recorded in March was well above and far from the median value of a ranking of 38 countries, where it stabilized at around 0.6% during the same period, according to a survey conducted by Nadin Argañaraz, head of the Institute of Fiscal Analysis (IARAF).
“Inflation in Argentina reached 5.1% in December, 6.0% in January, 6.6% in February and 7.7% in March. The gap between Argentina’s monthly inflation and the average of the rest of the sample considered was 7.1 percentage points in March, higher than in previous months. With the March data, Argentina consolidates average annual inflation of 60.9% over the past four years” said Arganaraz.
INDEC data has shown a relentless acceleration in recent months, which has left the rate at one level even higher than in July last year, when the economy minister, Martín Guzmán, resigned. Thus Argentina contrasted with the performance of the rest of the countries. While most had positive monthly inflation, three countries had negative inflation: Bolivia, Denmark and China. And only nine countries had inflation above 1.0%.
In annual terms, inflation in March it reached the highest record in over 30 years. It exceeded the double digits and the threshold of 94.8% recorded in 2022, which placed Argentina on the podium of the countries with the worst performance also in that measurement. “Considering the interannual variation of March 2023, Argentina (104.3%), Turkey (55.2%) and Hungary (25.1%) stand out in the sample considered”, indicated the IARAF.
The rest of the countries, however, have an annual inflation rate of less than 18%, with 10 nations with values below 5%, such as Brazil and Bolivia. Inflation in Mercosur’s main partner continues its downward trend and in March recorded a monthly change of 0.7% and an annual increase of 4.65%. Both measurements are lower than those recorded in February, when it was up 0.8% monthly and 5.6% year-over-year.
The rise in prices has led the Central Bank of Brazil to raise the interest rate, a decision that the Argentine Central Bank will now have to evaluate given the failure of the latest measures. “The overheating of prices leaves the central bank with the need to accelerate the devaluation of the official exchange rate and probably also to raise interest rates if we take into account that inflation in April would be close to 7%,” said a Delphos report.
The higher-than-expected data surprised the government. The Economy Minister, Sergio Massa, predicted that inflation would start in April with a “3 ahead” in April and 60% for the whole year, which has already become a dead letter. The government’s reaction was blame the shops and supermarkets, where there are no price agreements in place. While the Minister of Labor, Raquel Olmos, linked it to the drought and the lack of foreign currency.
And the chief of staff, Agustín Rossi, confessed: “We thought that the last quarter of last year we checked it.”
For April. consultancies expect a slowdown in inflation, albeit without drilling 6.5% per month. “In the month, the increases in public transport in AMBA (+6.6% for buses and trains), electricity tariffs, private schools (+3.8%, in agreement), prepaid (+2.4%), fuel ( +4% from April 15) and domestic service (+14%)”, Ecolatina estimates.
On the other hand, they expect higher inflation for the full year. from between 110 and 120%. “All of this in the uncertainty that the electoral transition will cause, with potential tensions on the gap and devaluation expectations that would exert further pressure, exacerbated by the strong impact of the drought on the availability of foreign currency and in the face of a “price fair” that will have little influence this dynamic,” said Ecolatina.
Source: Clarin
