Inflation quickens more than expected in new challenge

Argentina’s inflation accelerated in February at its fastest pace in nearly a year, surpassing forecasts and challenging the government’s targets for this year in its preliminary agreement with the International Monetary Fund.

Consumer prices rose 4.7 percent last month compared to January, above the 4.3 percent median estimate by economists in a Bloomberg survey. It was the fastest monthly inflation since last March and the third straight increase in the pace of price gains.

Food led all categories, jumping 7.5 percent from the previous month, with lettuce prices up 73 percent over that period. The data still doesn’t reflect the full economic impact of Russia’s invasion of Ukraine on global commodity prices.

From a year ago, inflation reached 52.3 percent, according to data from the INDEC national statistics institute published Tuesday, compared to a 51.7 percent estimate.

The price increase puts additional pressure on the government of President Alberto Fernández, who forecasts annual inflation to stay between 38 and 48 percent during 2022 as part of its agreement with the IMF staff released earlier this month. If passed by Argentina’s Senate this week, the deal would go to the IMF’s Executive Board for final approval in the coming days.

After February inflation data, “the projection included in the IMF’s EFF programme looks already wildly unrealistic even before the board discussion,” Pablo Guidotti, an economics professor at Torcuato Di Tella University in Buenos Aires, tweeted.

Rising global energy and food prices, the need to unwind electricity subsidies and a faster pace of peso devaluations adds additional hurdles to reel in what the government calls the nation’s biggest problem.

Argentina will start “a war against inflation” to try to tame price increases, Fernández said Tuesday before the data release.

“We’re going to stop the speculators and put things in order,” he said, without providing more specifics.

Contrary to the official forecasts, economists see inflation worsening this year. Analysts surveyed by the Central Bank last month expect 55 percent inflation this year.