Consumer prices rose 3.9 percent in January as inflation accelerated for a second straight month, the INDEC national statistics bureau reported on Wednesday.
Over the last 12 months, prices in Argentina have risen 50.7 percent – one of the highest annualised rates in the world.
Hikes in January were led by communications (7.5 percent), food and non-alcoholic beverages (up 4.9 percent) and health (4.1 percent), with prices overall last month rising at their highest level in 10 months.
Slowing runaway inflation is one of the key points under discussion with the International Monetary Fund (IMF) as the government seeks a new financing programme to restructure more than US$44 billion in debt.
Late last month, President Alberto Fernández announced that his government had reached an agreement in principle with the multilateral lender to restructure the remainder of the record US$57-billion stand-by loan agreed in 2018 under the previous government led by former president Mauricio Macri.
Argentina's government, which wants to close a deal by late March, is seeking a new extended fund facility (EFF) programme that runs until 2034.
Last year, Fernández's government extended a series of price freezes in order to lower prices on essential items. Last month, officials agreed a new deal with producers based on items that make up the basic basket of goods, limiting hikes to six percent until March.
Economist Sebastián Menescaldi, of the EcoGo consultancy firm, said that the acceleration of inflation in January could be "partly explained" by the relaxation of price controls.
He estimated that while the agreement with the IMF “would provide certainty, in the short term it will force new changes in relative prices” – citing, for example, the knock-on impact of a potential reduction of subsidies for energy and transport tariffs.
The Central Bank's latest survey of expectations, based on reports from 39 banks, consulting firms and economic research centres, forecasts an annual inflation rate of 55 percent for the 12 months of 2022.
"The impact of international inflation is difficult to calculate, but in February we are already seeing rises in bread and meat prices. We estimate 3.4 percent inflation for this month [February], but five percent for food," said Menescaldi.
Communications (7.5 percent) was the biggest driver of price rises in January, driven by an approved increase in telephone and Internet services, followed by restaurants and hotels (5.7 percent) and miscellaneous goods and services, which includes personal hygiene items (4.3 percent), INDEC reported.
Also outpacing the monthly rate were recreation and culture with a rise of 4.2 percent and health with 4.1 percent, due to an increase in prepaid medicine services.
Argentina's economy, which had been in recession since 2018 and slumped 9.9 percent in 2020 amid the coronavirus pandemic, recovered in 2021 and grew 10.3 percent in the first 11 months of the year.
According to estimates from the Economy Ministry, last year closed with a rebound in GDP of more than 10 percent, with the economy forecast to grow another three percent in 2022.
Economy Minister Martín Guzmán has said that the agreement reached with the IMF, which must be approved by Congress, will not imply either austerity or a brake on growth.
The government wants to close a deal with the Fund quickly and be ready to present a bill outlining the IMF deal when the ordinary sessions of Congress open on March 1.