In just one month, the food and beverage sub-index rose 9.8%, according to official statistics from Argentina.
Worrying inflation in Argentina accelerated last February, surpassing a triple-digit year-on-year rate for the first time in 31 years and increasingly complicating the objective of slowing down the hectic pace of consumer prices this year.
As reported on Tuesday by the National Institute of Statistics and Censuses (Indec), consumer prices experienced a year-on-year rise of 102.5% last February, 3.7 percentage points more than last January.
This year-on-year rate not only breaks the triple-digit barrier, but also is the highest since September 1991 (115%)when Argentina was trying to leave behind the hyperinflation of 1989-1990.
Likewise, in the second month of the year, consumer prices grew 6.6% compared to last January, evidencing an acceleration with respect to the rate of 6% of the previous month.
Among the increases registered in February, the monthly increase of 9.8% in food and beverages stood outa worrying figure due to its impact on the cost of the basic food basket, a key indicator to measure indigence.
The escalation in food prices occurred despite the new price agreement for mass consumption products launched by the Government at the beginning of February.
According to the official reportArgentina accumulated inflation of 13.1% in the first two months of the year, well above the 8.8% of the same period of 2022.
The behavior of prices in the first two months casts doubt on the real possibilities of slow down inflation to 60% this year, from 94.8% in 2022as the Government has proposed among its macroeconomic stabilization objectives.
“The government’s goal of inflation of around 60% year-on-year for December seems increasingly unattainable,” the consultancy Ecolatina said in a report, for which inflationary inertia appears “difficult to disarm in the short term.”
And this is due to a series of factors operating in favor of that inertia, among them the impact of the severe drought suffered by Argentina on the price of some foodsthe pending increases in public service rates and the dynamics of salary recompositions in a year of presidential elections, in which the economy will have a key weight in the voters’ decision.
Inflationary pressures are also fueled by the restrictions on imports, the rising prices of the different exchange rates that coexist in Argentina and the imbalances that drag the public accounts and the Central Bank for financing the Treasury.
pent up inflation
According to Eugenio Marí, chief economist of the Libertad y Progreso Foundation, consumer prices in Argentina will grow 110% this year, with “a very important component of repressed inflation.”
“In the last three years, arrears have accumulated in electricity, gas and water ratesin transportation, health and other items with regulated prices,” Marí explained to EFE.
Added to this is the exchange and monetary imbalance which, according to the expert, “makes it essential that, if inflation is to begin to fall, progress is made at least towards consolidated fiscal balance and the Central Bank is given real independence.”
EFE International news agency based in Madrid and present in more than 110 countries.