Argentina reached 71% when it comes to inflation, which was also marked as the biggest increase in recent years. In addition, the rise in prices in the country is currently the highest in Latin America, also identifying a negative milestone in public services and the devaluation of the Argentine currency (peso).
According to the Instituto Nacional de Estadística y Censos (INDEC), from January to July 2022, the increase in Argentine tariffs grew by up to 46.2%. The increase in inflation and public services, in addition to taxes and inflation, become disproportionate to the country’s salary increase, which increased by only 3.5%.
Why is the crisis happening?
In addition to the change of economy ministers, the Argentine government is already experiencing some political problems. In a social way, the economic crisis has had reactions from society, such as protests by rural producers, in view of the scarcity of diesel and also about the salary.
At the moment, the country is trying to pay off debts and the country is needing to increase the basic interest rate to try to neutralize inflation, but they have not had any results. In addition, the country’s interest rates continue to rise, while the unemployment rate reaches up to 7% in Argentina. Thus, the country has around 900 thousand people who are currently looking for a job with a precarious market situation.
How did Argentina get here?
To understand the indexes of the last month, it is necessary to go back 20 years, when inflation surpassed the figures for the period. More specifically, in April 2002, three months after the country ended the “convertibility”, a system that had been in force for more than 10 years, which proposed a 1 to 1 parity between the dollar and the peso.
In the last year, the price increase exceeded 70%. In this case, it is necessary to go back to January 1992, when Argentina adopted a fixed exchange rate, which ended inflation after a period of hyperinflation.
According to data collected by the National Institute of Statistics and Censuses (INDEC), the price increase was 46.2% in the first seven months of this year – with July being the month with the highest increase. This is all the more worrisome because, while inflation soared to 7.4%, wages rose by only half the rate: 3.5%.
Forecasts and Comparisons
About the future possibilities, the Central Bank of Argentina shared, in the last week, the market expectations for the rest of the year. Some analysts in the country expect inflation of 90.2%, up 14.2 points from the forecast made a month ago. Other experts predict a rise of 94.7%, which is 15.4 points higher.
However, these figures can still be conservative, considering the increases in electricity, water and gas tariffs, scheduled for September, and the possible devaluation of the Argentine peso. The Latin American Economic Research Foundation (FIEL), for example, one of the best-known Argentine consulting firms, forecasts inflation of 112.4% in 2022.
With these numbers, monthly inflation in Argentina was the highest in the entire American continent, surpassing, in July, with 7.4%, even Venezuela (5.3%).
|Country||Inflation in July 22||Inflation accumulated in the last 12 months|