Argentina’s runaway inflation rate stole the headlines once again this week when the INDEC statistics bureau revealed that consumer prices rose at the fastest pace in more than three decades in June.
Prices jumped 5.3 percent last month, fractionally up on May’s 5.1 percent and making for an annual inflation of 64 percent, according to government data released Thursday.
Argentines are suffering from one of the worst inflation rates in the world and this was the highest figure for June since 1990. Prices have now risen 36.2 percent in the first half of the year, according to INDEC.
Analysts fear worse to come from the second half of the year in the aftermath of the market jitters following the resignation of economy minister Martín Guzmán early this month and growing political tensions within the ruling Frente de Todos coalition.
The REM survey of market expectations carried out by the Central Bank is already projecting 2023 inflation at 76 percent, with one of the economists consulted forecasting 79.2 percent. Some private analysts are now openly forecasting a rate peaking at 90 percent this year.
Complaints against the economic policies of President Alberto Fernández’s government are growing. The inflation figure was released on a day of demonstrations by popular organisations and picketers, with thousands of people marching from Congress to the gates of the Casa Rosada to demand increases in social benefits and the creation of a universal basic income payment for the most disadvantaged.
“What we see is the worsening day-by-day, year-after-year, of the conditions of the neighbours, of the workers in each neighbourhood, both the unemployed and the employed, who also see their conditions worsening,” said Gabriela Calarco, a member of the Teresa Rodríguez Movement, as she protested.
The basic food basket for a family of four hit 100,000 pesos in May (US$813 at the official exchange rate at the time), but the minimum wage that same month was 39,000 pesos US$(317 dollars), according to INDEC.
Poverty affects 37 percent of the population and unemployment is seven percent.
Union leaders are on alert and this week called for the early opening of wage renegotiation talks in lieu of falling purchasing power.
Trade unions seen as close to President Alberto Fernández worry that a reopening would weaken the ruling coalition even more, while the Unión Obrera Metalúrgica (UOM), Argentina’s main industrial union which is seen as closer to Vice-President Cristina Fernández de Kirchner, is calling for an increase of 65 percent per workers after a change of leadership.
UOM Secretary General Armando Cavalieri said Thursday that the situation facing workers was severe.
“The increases we got are already gone. People are already practically wanting to resolve collective bargaining agreements,” he said. “We have the opening [of bargaining] next month.”
Healthcare, utilities and alcoholic beverages led all categories in price increases on a monthly basis. One measure of “core” inflation, which excludes volatile food prices, rose 5.1 percent from a month earlier.
The main culprit was health with a 7.4 percent increase in costs, followed by public services and fuels with 6.8 percent and restaurants and hotels 6.2 perdent.
The most sensitive item, food and beverages, weighed in below average at 4.6 percent but continued to be the centre of concerns. Core inflation (leaving aside seasonal and regulated prices) was 5.1 percent.
Parallel estimates for June inflation averaged around 5.5 percent, which was also the INDEC estimate for Greater Buenos Aires. Northeastern provinces averaging price increases of 4.9 percent fared best in INDEC’s regional rankings.
Earlier this month, the new Economy Minister Silvina Batakis had ducked making a projection of inflation for this year: “It would be very unprofessional on my part to risk projecting inflation in this unprecedented situation of global imbalance.”
In last Monday’s press conference she again highlighted that due to the Russian invasion of Ukraine and the surge in commodity prices, “we are totally removed from any situation where one could project inflation.”
Earlier this week presidential spokesperson Gabriela Cerruti appealed to food companies “not to play around with the food and tables of Argentines if there were mark-ups due to speculation, greed or uncertainty.”
“They are not playing around with this government but the food of Argentines,” she insisted, dismissing fears of devaluation. Ahead of Thursday’s INDEC announcement, she also expressed hopes that the June figure would be lower than May.
Finally, she assured that the government would work towards guaranteeing that there was no hoarding in shops and supermarkets although she admitted that supplies might fall short in some cases.
Argentina has been suffering from high inflation for years, recording an annual rate of 50.9 per cent in 2021. But price increases have accelerated in 2022, in part sparked by the global crisis caused by the war in Ukraine.
Along with soaring inflation the nation’s currency, the peso, is under strong pressure, despite the tightening of exchange controls since 2019.
The official exchange rate stood at 135 pesos per greenback on Thursday, but the peso traded at around 290 pesos for each ‘blue’ dollar (parallel, black market exchange) and on the debt bond market – a gap of around 130 percent between the two rates.
As well as social organisations, demands are also being voiced by agricultural producers, who on Wednesday halted the sale of grain and livestock for 24 hours and demonstrated on major roads across the country to demand tax relief and increased fuel supplies.
Argentina is one of the largest food producers in the world. Agribusiness exports are estimated to reach a record US$41 billion in 2022, some US$3 billion more than in 2021.