In 2022, Argentina once again experienced a difficult year economically. The South American country has experienced annual inflation of 94.8% – one of the highest rates in the world – which has not been recorded for thirty-two years.
The National Institute of Statistics and Census (Indec) published the December index on Thursday, January 12, although it confirms the relative decline in recent months, which was 7.4% in July, 6.3% in October and 4.9% in November. Inflation in Argentina in 2021 was 50.9%. The government hopes to curb it, limiting it to 60% by 2023, based on its budget.
The previous peak was from 1991, with several consecutive inflation rates above 100%, which marked the end of a cycle of one-year hyperinflation (over 1,000%).
“As you choose a jewel”
The evolution of some food labels makes you dizzy: a liter of milk has increased by 320% in three years, oil by 456% by the end of 2022, sugar by 490%. Institution of Abset Board.
“You stand in front of the shelves, analyzing the prices, like you’re choosing a piece of jewelry … I stopped at the bakery, and it was crazy. I almost stopped for grated cheese, almost 3,500 pesos. [environ 17,50 euros au taux officiel] per kg when it does not reach 1,000 [5 euros] A year ago…”While shopping in Parque Chacabuco, a district of Buenos Aires, the retired Agence France-Presse explains to Julien Ratano.
“Milk, cheese, eggs, no price has anything to do with it anymore. A box of 30 eggs, I bought a year ago for 150 or 200 cents. [près de 1 euro]700 is on [3,50 euros] Today! »Roxana Pardo, a 34-year-old shopper, mills about in a supermarket in the same middle-class neighborhood.
Argentina, Latin America’s third largest economy, has been mired in twelve years of double-digit inflation, due to a number of factors, both internal (persistent budget deficits, large-scale inflation expectations) and external (the impact of the war in Ukraine) on the overall macroeconomic recovery, especially post-pandemic.
After a 10.3% increase in activity in 2021 following a three-year slowdown, the country should end 2022 with growth of around 5%. By 2023, this growth should be around 2%, as slow as the entire global economy, but one of the strongest in Latin America, according to World Bank forecasts this week. Argentina’s three consecutive years of growth from 2006, 2007, and 2008 would be unprecedented, and the government of Alberto Fernandez (left of center) did not hesitate to withdraw.
Wages struggle to keep up with inflation
December’s prices, according to the index, were mainly driven by the hotel and restaurant, drinks and tobacco sectors, which is not an unusual occurrence during this Australian summer.
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Economy Minister Sergio Massa – the third in a year – is now betting between 3% and 4% monthly, a gradual restoration of foreign exchange reserves – especially through recorded exports in 2022 – and increased inflation control. Fiscal discipline to stabilize the economy (deficit target falls from 2.5% to 1.9% in 2023).
It has so far, as of last December, satisfied the International Monetary FundArgentina reached a deal in March to refinance more than $44 billion in debtLegacy of debt contracted in 2018.
But after two years of rising activity and falling unemployment (7.1%), wages are struggling to keep up with inflation, and an informal job is no guarantee of uncertainty. So according to the latest figures from mid-2022, 36.5% of the 47 million Argentines are in poverty, including 2.6 million in extreme poverty.
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