Inflation exceeded 100% in Argentina
Annual consumer inflation (CPI) in Argentina exceeded 100 percent last month. Thus, Argentina became one of the countries with the highest inflation in the world. Extremely high inflation continued to put additional pressure on the economy, which is expected to enter a recession ahead of this year’s presidential election.
Consumer prices rose 102.5 percent on-year in February, reaching their highest level since late 1991, when the economy was at 3,000 percent hyperinflation, according to data released Tuesday. Consumer prices rose 6.6 percent compared to last month.
Food prices rose about 10 percent compared to the previous month, fueling higher headline inflation. According to the data, the cost of beef, which is a staple of Argentine meals, rose 35 percent in the Buenos Aires metropolitan area last month.
THE MOST IMPORTANT SUBJECT OF THE SELECTION
Inflation will be one of the main issues in this year’s presidential elections. Having failed to stabilize the crisis-prone economy, both political parties are struggling to win over voters. However, inflation, which is the biggest concern of voters according to polls, has wiped out the positive effects of recent economic growth and low unemployment.
The country’s left-wing president, Alberto Fernández, and his divided coalition are struggling to unite behind a clear strategy or candidate. The coalition of right-wing Mauricio Macri, who ruled the country from 2015 to 2019, did not unite behind a single candidate. Also, voters are very skeptical, as this government has more than doubled the inflation rate to 57 percent.
A third candidate, Javier Milei, is gaining momentum with Argentina’s proposal to replace the peso as the national currency with the US dollar.
INFLATION AND CONTRACTION TOGETHER
The inflation that plagued Argentina is also destroying wage increases in an economy where nearly 40 percent of the population lives in poverty. Neither the pro-employment approach taken by the Macri administration nor the currency controls and price freeze measures implemented during the Fernández term managed to bring consumer prices back under control.
Accelerating inflation, coupled with a rapidly worsening drought, is expected to push Argentina deeper into recession. Analysts are predicting 2 percent growth in the government budget, while forecasting the economy will contract by 3 percent in 2023.