Saturday, July 20, 2024
Perfil

ECONOMY | 13-09-2023 16:11

Inflation in August hit 12.4% – Argentina's highest monthly figure in 32 years

Data from INDEC national statistics bureau shows consumer prices soared by more than 12% last month; First monthly figure to accommodate impact of post-PASO devaluation of peso; Inflation over last 12 months reaches 124.4%.

Argentina’s ceaseless inflationary spiral hit a 32-year monthly high last month as prices surged 12.4 percent following the recent devaluation of the peso.

The devastating data from the INDEC national statistics bureau, published on Wednesday afternoon, reveals that consumer prices in the country have soared by 80.2 percent in just the first eight months of the year. 

With purchasing power plummeting, inflation is now running at 124.4 percent per annum, according to official government data. It is the first release of inflation data since the 18 percent devaluation of the peso in the aftermath of the PASO primaries on August 13, agreed with the International Monetary Fund to unlock disbursements from Argentina's US$44-billion credit programme with the multilateral lender.

The August figure represents a sharp acceleration in consumer prices, which had risen 6.3 percent in July, only 0.3 points up from the rate registered the preceding month. 

Prices were also impacted sharply by a rise in interest rates, which now stand at 118 percent per annum.

The last time that Argentina recorded a double-digit monthly rise was in April 2002, when consumer prices rose 10.4 percent, in the aftermath of the 2001 economic crisis. You have to go all the way to February 1991  – two months before the introduction of convertibility – to find a higher monthly rate (27 percent).

In general terms, goods rose 13.7 percent with services up 9.1 percent. August’s hikes were led by food and non-alcoholic beverages, which soared 15.6 percent, underlining the problems facing citizens as the poverty rate nears 40 percent. Major increases in the prices of meat and vegetables led the surge.

The sector was closely followed by healthcare, which rose 15.3 percent due to increases in the costs of medicines and prepaid health plans. Domestic appliances, equipment and maintenance increased 14.1 percent. Restaurants and hotels rose 12.4 percent, with recreation and culture up 11.6 percent.

The lowest hikes were recorded in communications (up 4.5 percent) and alcoholic drinks and tobacco (up 8.5 percent). 

Over the past weeks, Economy Minister Sergio Massa has announced a series of measures designed to boost the pockets of workers, including the removal of income tax for all but 80,000 registered taxpayers. His portfolio is also in talks with major food producers and suppliers as it seeks to extend price controls for key goods in the basic food basket.

Following publication of the inflation figure, the government will seek to take on debt in the market with bonds indexed to INDEC’s consumer price index and the dollar.

Government officials admitted prior to the release that price hikes in August were sky-high. Consultancy firms and analysts had generally forecast a hike of 10 percent, especially in the wake of double-digit figures for the same month by price-trackers in Buenos Aires City and Córdoba Province.

"In August we are going to have a figure below what many private consultants are projecting, who are talking about 12 and even 14 percent. We will probably have a double-digit figure, above 10 percent, but not as much as private consultants are forecasting," said Agustín D'Attellis, a member of the Central Bank's board of directors, in a radio interview earlier this week.

The expert warned, however, that hikes would continue into the next month. “Because of the carry-over effect, we will probably have a figure close to that in September as well, although probably a little lower,’ said D'Attellis.

Economic analyst Salvador Vitelli also predicts a “statistical drag” into the ninth month of the year. “The devaluation will have a significant impact in September. It is to be expected that we will have another month with double-digit inflation," he indicated.

"An anti-inflationary plan is necessary, but obviously it won't exist until 10 December," said economist Victor Beker, the director of the Centre for the Study of the New Economy at the University of Belgrano.

According to the most recent Central Bank survey of market expectations (REM), prices will rise 12 percent next month. Inflation for the year is forecast to be 169.3 percent. If this is reached, it would be the highest annual peak since the hyperinflation of 1990.

For economic activity, the REM survey of economists, analysts, banks and consulting firms projects a three percent drop in gross domestic product this calendar year.

Opposition politicians reacted strongly to the publication of the updated inflation data. Juntos por el Cambio presidential candidate Patricia Bullrich, said that the figure was a disgrace.

"It's not just inflation, it's the number that sums up the tragedy that Massa and Kirchnerism have left us,” she said in a post on social media.

Córdoba Province governor and presidential candidate for Hacemos por Nuestro País, Juan Schiaretti, declared: "This is the product of the erratic macroeconomic policies of recent governments and the expression of the total failure of Kirchnerism.”

Left-wing presidential candidate Myriam Bregman said the data exposed “the reality of Massa's economic measures for what they are: a blow to people's pockets.” She concluded that food inflation is “obscene."

 

– TIMES/NA/PERFIL

related news

Comments

More in (in spanish)