Argentina’s National Institute of Statistics and Census released its consumer price index (CPI) for February, which rose 6.6%, mainly due to price increases in food and beverages. This figure is the highest in Argentina’s history and more than 100% year-on-year growth, alarming local analysts.
Argentina’s CPI hits record high in February
Argentina’s National Institute of Statistics and Census surprised local analysts with the release of February inflation figures. According to thereport, the monthlyfor February, the CPIreached 6.6%, surpassing the 6% recorded in January. The main cause of this increase was the rise in food and beverage prices, which rose 9.8%, hitting Argentines in the pocketbook. Meat led the price increases in this sector, with prices rising by more than 30% in some cases.
Inflation reached an all-time high, with prices rising 102.5% year over year, the highest in more than 30 years. Despite this unprecedented action, analysts expect another acceleration in March, discouraging the government’s hopes of keeping CPI below 100% in 2023.
Argentina’s figure is the second highest in Latam, behind Venezuela’s y/y CPI, which reached 155.8% in October.
Losing the Battle
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Local economists are concerned about the country’s accelerating prices and are calling for changes in the economic policies of the Alberto Fernandez administration. The government has been trying to control inflation since last October by establishing price control mechanisms, but these moves have failed to achieve the desired goals.
Martin Vauthier, an economist at financial counseling group Anker Latam, said,:
We need strong fiscal elements, an exchange rate consistent with reserve accumulation, and a stabilization program with consistent monetary policy that serves to restructure the demand for money against expectations.
Santiago Manoukian, research chief of Ecolatina, also declared.
The main concern is that the rise was driven by food and beverages, with a larger impact in the consumption basket of the poorest households.
Rising prices in Argentina have led some retailers to fix prices in US dollars to avoid constant re-pricing, a phenomenon also common in Venezuela.
On March 4, President Alberto Fernandez communicated the creation of a latam-wide mechanism to combat inflation. This new mechanism would integrate a clearing system between Argentina, Brazil, Cuba, Colombia, and Mexico that would allow for the exchange of one commodity for another with a price increase.