Inflation in Argentina reached 12.4 percent last month, the highest rate since 1991, leaving people across the country struggling to make ends meet.
It's a familiar feeling, month after month. Consumer prices have risen 80.2 percent since the turn of the year and are up 124.4 percent over the past year, according to the INDEC national statistics bureau.
The last time monthly inflation ran so high was back in February 1991, 27 percent, when the country adopted a fixed dollar-peso parity. The last time the consumer price index reached two digits was in April 2002 (10.4 percent), right after the country abandoned that parity model.
Food and non-alcoholic drinks rose the most last month at 15.6 percent, “resulting from an increase in meat and related products, and vegetables, tubers and legumes.” Meat, essential to Argentine diet, jumped by over 30 percent. Common beef mince rose by 39.4 percent in August. Other finer cuts are also heading in that direction too
“We’ve got nothing, no money to save," complains Karina Sablich, a school teacher, while shopping at an outdoor market in Buenos Aires. "We’re living hand to mouth. I work all day because one job isn’t enough."
Economy Minister Sergio Massa, running as the ruling coalition's presidential candidate in the October elections, said shortly before the rate was disclosed that “August has been one of the worst months in the economic processes of the last 30 years, as a result of an imposition by the International Monetary Fund."
He was referring the 21-percent devaluation on August 14, carried out by the government and agreed precisely with the IMF in order unlock disbursements from Argentina's US$44-billion credit programme.
This was followed by a deluge of price hikes, which arrive just a few weeks before the presidential election, Opposition candidates promise to apply a strong fiscal adjustment to stabilise the economy should they win the race for the Casa Rosada.
The market expected two-digit inflation. The Stock Exchange closed in the black (2.84 percent).
Healthcare rose by 15.3 percent; household equipment and maintenance 14.1 percent; and transport 10.5 percent.
“It’s shameful," declared opposition presidential candidate Patricia Bullrich. “It’s not just inflation, it’s the number summing up the tragedy left by Massa and Kirchnerism."
Economist Victor Beker, director of the Center for New Economy studies of Universidad de Belgrano, said “an anti-inflation plan is necessary."
“But there obviously won’t be one until December 10,” he added, referring to the date when the new government will be inaugurated.
Argentina has already had two episodes of hyperinflation, one in 1989 at 3,079 percent annually, and another in 1990 at 2,314 percent.
The country then adopted the “convertibility” model, underpinned by privatisation, deregulation and a complete opening of the economy. Annual inflation dropped to a single digit, but the increase of imports added to the debt in foreign currency, ruined industry and caused a deep recession which led to the political crisis of 2001 and the devaluation of the peso in 2002.
Last Wednesday, Massa announced value-added tax benefits for up to the equivalent of a monthly amount of US$50 to purchase basic products for over nine million workers and pensioners. Days earlier, he had also raised the income-tax floor, removing it for all but less than 90,000 workers.
Wary on the streets and supermarkets, people in Argentina are stretching their money as much as they can.
“There is total disbelief, and despite everything, we still know that for now things aren’t going to change", Sablich said. “That’s the saddest thing about being in this country right now: the uncertainty of not knowing how we’re going to get out of this, or who will do it”.
The September FocusEconomics report, gathering over 40 analysts from banks and consultancies, estimates that the inflation will close in 2023 above last year’s level, “boosted by the collapse of the peso amid the monetary financing of the fiscal deficit” – that is, financing by printing money.
“A depreciation of the peso quicker than expected and fiscal generosity by the election in October are increasing key risks."