Prices in Argentina record the highest year-on-year rise in three decades

Buenos Aires, May 12 (EFE) .- Argentina’s consumer price index (CPI) recorded the highest year-on-year rise in three decades in April, causing increased criticism of the national government, whose policies have not yet managed to placate a problem that is already chronic in the country and that worsened after the Russian invasion of Ukraine.

As published this Thursday by the National Institute of Statistics and Censuses (Indec), the inflation rate experienced a year-on-year increase of 58% last month, the greatest advance since January 1992, when the country, then governed by Carlos Menem (1989- 1999), was beginning to emerge from hyperinflation.

Likewise, in the fourth month of the year, consumer prices grew by 6% compared to March, a decline of just 0.7 percentage points compared to the figure for the previous month, when the highest month-on-month increase in the last twenty years was reported. .

The food and non-alcoholic beverages sector was once again the category that contributed the most to the monthly CPI for April, highlighting the increases in oils, bread and cereals (between 8 and 15% depending on the region) and meats and dairy (5 and 7%).

In this sense, the price of food accumulates an increase of 28% in the first four months of the year, a reality that fully impacts the high rates of poverty and indigence of the South American country.

PRESERVE THE REAL WAGE

After the approval of the debt refinancing agreement with the International Monetary Fund (IMF), the Argentine Government established as top priority to stop the incessant increase in prices, motivated by the confluence of an adverse international context and the country’s own internal dynamics.

While the policies to reduce the fiscal deficit and restrict the monetary issue, agreed with the IMF, are established, the Executive focused its efforts on protecting the «real wage», seeking that the income of workers increase above the inflation.

Continue reading the story

During the last month, employers and unions sealed numerous salary adjustments thanks to the advancement of joint negotiations, with salary increases that range between 45 and 60% for this year.

The Government also anticipated the rise in the minimum wage, allowing the 45% increase that was to be applied in four installments until December to be brought forward to August, placing it at 47,850 pesos (408 dollars) per month by then.

«The increases had to be advanced to ensure that the minimum wage beats inflation and, in this way, the entire salary structure moves in the direction of increases in the purchasing power of income, which is a central objective of the Government,» Economy Minister Martín Guzmán said Wednesday in an interview with the TN news channel.

CRITICISM TO THE MANAGEMENT

The upsurge in inflation is one of the central points of the conflict within the ruling party, divided between the supporters of the president, Alberto Fernández, and the vice president, Cristina Fernández de Kirchner, who leads the most powerful faction within the government coalition .

For Guzmán, one of the ministers most criticized by Kirchnerism, the government has drawn up a «consistent» economic program that will contain and reduce inflation levels, but he acknowledged that «there is a way to go and a speed at which travel».

«We hope that in May there will be a decrease in the month-on-month inflation rate, but clearly inflation is a central objective of economic policy. It must be attacked decisively and consistently, so that the problem can be solved in a lasting way, and that does not resolved in five minutes,» said the head of the Palacio de Hacienda.

Another of the most questioned aspects, and which could have a negative impact on the next inflation rates, is the review of energy subsidies: the Government intends to segment electricity and gas rates, so that the richest 10% pay the full price of energy.

«What is the point of subsidizing the energy consumption of wealthy sectors? It is not convenient for Argentina to have 2.5 or 3 points of GDP in energy subsidies, that is not healthy for the functioning of the economy,» Guzmán stressed.

PROJECTIONS FOR 2022

If nothing changes in the coming months, Argentina could end the year with the highest inflation so far this century: analysts consulted every month by the Central Bank raised their retail inflation forecast to 65.1% for 2022, far exceeding the 53.8% registered in 2019.

Some numbers that could affect compliance with the program agreed with the IMF, which set inflation ranges of 38-48% for this year.

Javier Castro Bugarin

(c) EFE Agency