Argentina's government announced on Wednesday that it extended a freeze on fuel taxes until February 2024 to avoid further hikes.
The news, announced less than three weeks before the presidential run-off between Sergio Massa and Javier Milei, comes with runaway inflation set to exceed 150 percent in the coming days.
The freeze, which was to have end on Wednesday but has now been extended by three months, meant "the state is renouncing income so that fuel prices do not rise more than expected," Massa, Argentina's economy minister, said in a video broadcast Wednesday.
In a decree confirming the move, published in the Official Gazette, the government claimed that the measure would "ensure the necessary stabilisation and adequate evolution of prices."
Under an agreement with the oil sector to control inflation, prices at the pump had been capped for several months. On Wednesday, they rose by between seven and ten percent to about 400 pesos (US$1.10) per litre for premium gasoline – less than they would have with the levy added.
"Every time we have to give up a tax to... protect the wallet of Argentines, we will," said Massa, who is the presidential candidate for the ruling Unión por la Patria coalition.
On October 22, Massa pulled off a major upset to garner the most votes – 36.68 percent – in a first round against Milei, the libertarian outsider who took 29.98 percent.
Massa has overseen triple-digit inflation and record poverty levels in little over a year as economy minister.
The minister this week continued a war of words with oil companies which he has all but accused of being responsible for fuel shortages in the country last week, by favouring exports over domestic supply.
Domestic production reached 645,000 barrels of oil a day in September – a seven percent improvement on the same month in 2022.
"They can try to force an increase of 20 percent or 40 percent, with me they will not have it," said Massa, who also warned that economist Milei's plans to liberalise the economy would see "fuel prices increase to 800 pesos per litre."
The minister had recently threatened to freeze fuel exports altogether. Long queues formed at petrol stations across the country over the weekend as drivers rushed to fill up their tanks.
Following these threats, he said on Tuesday: "Yesterday, magically, fuel began to appear that was not there," adding that supply at fuel stations was "normalising."
"I understand that the critical situation has been overcome," he added.
Massa's first-round rivals Milei and Patricia Bullrich, who placed third, have both accused him of electioneering in office, with several recent relief measures for Argentines even at the risk of further inflating a chronic budget deficit.