A good measure of things, we know, is to compare them with others of the same or similar species. February’s inflation rate was 13.2%. big number which Javier Milei proclaims if he measures himself against the 25.5% of December or the 20.6 of January and therefore, with a lot of wind in his favor, goes through a deceleration of the inflationary process.
But that 13.2% that the president praises as the effect of the minister’s “formidable work”. Luis Caputo It is no longer a large number, but the large and very large number that it really is and that occurs in the INDEC modules themselves. It is noted that in the 85-month series starting from January 2017, only two periods exceed 13.2%: December 2023 and January 2024. there are 82 lower ones.
From the same saga we have the Argentine inflation in February more than triple at the annual rate of 3.9% in Brazil and exceeds the monthly rate of 1.2% set by Venezuela and 2.5% in Bolivia. In the midst of a mess that has been accumulating for years, we remain as the only country in the region that exceeds 200% per yearwith 276%, or 174 percentage points more than the index from a year ago.
Just like an ultra voracious Pacman, In three leaps the INDEC indicator has consumed 60% of the exchange rate adjustment spent by Milei in its debut. Between December and February it rose by 71% against a 118% increase in the official exchange rate, causing a still vivid flash of a system of free and unregulated prices.
It was a preview of the full-steam mega fix it proposes to install the era of permanent fiscal surplus and, consequently, deflate the weight of the economic state and the political state. Enough of that operation, in which the objective of hitting him lurks a change in power relations, appears in the debate on Milei’s DNU and the so-called Omnibus Law; rather, in the contents and implications of both.
In tandem with the chainsaw, the inflationary blender functional to the Government’s plan has already dealt a real blow of 38% to public spending in the first two months of 2024 compared to the same period of 2023. To understand better, the collection represents 5.5 trillion pesos or, if you prefer , US$ 6,460 million at the official exchange rate.
The largest in 30 years
What some analysts call “savings” means the largest cut for a two-month period in the last 30 yearsaccording to data from Iaraf, an institute specialized in the analysis of public accounts.
Predictably, I know, the shock occurred precisely on pensions and pensions by appealing to a formula that Kirchnerism managed to establish and which, in fact, is a half-hearted indexation and to the extent of the adjustments. Put in silver, that’s a 1.9 billion peso hit to the income of about 7 million people who aren’t exactly living in the best of worlds.
And what remedy would exist in the event of a loss amounting to a good third of the assets? There would be another classic these days: a $70,000 bond which obviously does not cover the hole left by January’s inflation, much less the delay accumulated for years.
There is more or less the same thing in the formula that the government has announced to replace the current one: after a 12.5% increase in April, starting from May pensions will now follow the inflation set by INDEC. Very clear: The service that supports a large part of the fiscal surplus of the first two months is not affected, i.e. “little hair for the old woman”.
And so he does it his way, the fact is that pressured by the opposition and above all by a problem that burns and can no longer resist dribbling, Milei had to accept the cost of being the one who changes pension mobility K. By decree and awaiting the entry into force of a law that promised a lot to Congress.
Returning to the cut for the January-February two-month period, after the spending forecasts, the 748 billion dollars allocated to public investments continue, i.e. a drop of 82% compared to the same two-month period of 2023 which seems to be brought forward the end of the State present in the basic and absent productive and social infrastructural works. It must be assumed that the government will look for alternative sources, because if there is something for which the country pays dearly it is precisely this structural deficit.
Among other things, a figure that is also a yellow light: in Latin America public investments are on average around 3.9% of GDP and in Argentina they have not reached 2% since 2017, that is, they are half or less than half of what exists in countries comparable to ours, if not actually lagging behind ours.
With $632,000 million in energy subsidies and $385,000 million in wage bills, the first two months’ fiscal savings reach $3.6 trillion in just 4 chapters of the National Budget which, measured in silver, represents 66% of the total. More than half of the 66% comes from pensions and pensions.
The conclusion at the end of this table is this the “flaction blender” alone is not enough and there are some items that do not allow further adjustments. What’s worse, if you like, is that inflation increasingly seems like too dangerous a partner.
There is an average figure hidden among a sea of numbers from a consultancy firm that speaks precisely of these risks: it speaks of a 12% increase in the cost of food in March. Perhaps it seems acceptable compared to some recent antecedents, except for one detail: with 12%, food will accumulate more than 50% in the first quarter, which no longer seems so acceptable in our parts.
Where we come from and where we are going, it would be worth adding if we look at the table of rate increases included in the report of another consultancy firm.
In gas, 230% was recorded in April and 40% in May. For electricity, 115% in May. In April we have 209% in water and 359% underground. For buses in the Metropolitan Area there is a 160% discount but still without a defined date.
The first conclusion that emerges from this burst predicts continuous double-digit months and puts in brackets the 8.5%, or the blessed figure, that the institutions consulted by the Central Bank predict for June. What follows is, in reality, a decision that is being prepared by the Ministry of Economy and aims at this deal a heavy blow to inflation and the inertia that fuels it without brakes.
The problem is that stopping inflation was the first ironclad objective in the libertarian plans. It is the fiscal shock, the formula that would allow the objective to be achieved. Today the effects of adjustment and inflation are alive and well.
Source: Clarin
