Inflation in Latin America’s 3rd largest economy, now at 80.2% overall since January, should exceed 94.8% in 2022 by the end of 2023, already its worst result in three decades.
A predictable increase
The last time monthly inflation in Argentina crossed double digits was in April 2002, as the economy gradually recovered from a costly period of fixed exchange rate (one peso to the dollar) in parallel with the deregulation of the economy. The decade initially saw an end to the hyperinflation of 1989-1990 (indexes 2000%) but was accompanied by a banking crisis, severe recession and social implosion that left 39 dead by the end of 2001.
An increase in inflation can be predicted in August. Following the primary elections on August 13, the government implemented a strong devaluation of the peso by 20% (currently 365.5 to the dollar), which gradually but inexorably depreciated over two years.
By the end of August, before economic players and suppliers adjusted their prices to incorporate both chronic inflation and the new exchange rate, common labels were in flux, and sometimes even shortages. “August was one of the worst months of the economic process of the last 30 years,” declared Economy Minister Sergio Massa on Wednesday, who is also the candidate of the government camp (center left) for the undecided October 22 presidential election. .
The minister blamed the “devaluation operation of the International Monetary Fund” in part for these poor results. IMF Argentina’s debt refinancing, a legacy of a $44 billion loan granted by the fund in 2018, is part of an agreement that ends in 2022, setting Argentina targets for budget control and restructuring foreign exchange reserves.
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