July 26, 2021

Argentines facing an inflationary spiral

Emilce Peralta doesn’t really know: should she slip 500 pesos (4.30 euros at the official rate) into her pocket? A bit more ? Or will the double still not be enough for a back-up to the neighborhood mini-market? “We don’t know anymore. The prices are going up all the time. It is painful “, let go of this 49-year-old public-sector cleaner and mother of three teenagers in La Plata (60 kilometers south of Buenos Aires).

Faced with the crazy price race (+ 46.3% in April 2021 over one year), she and her husband, Jorge Lorenzo, 50, gendarme, have been doing like the majority of Argentines for years: they tinker and suffer. “We hardly buy yogurt or clothes anymore, it’s too expensive now”, remarks Mr. Lorenzo, while the revaluation of wages does not keep pace with inflation.

During the austral summer, the family went on vacation for a week. “Only because we were given accommodation”, specifies the father, who, coming from a working-class background, like his wife, never ceases to emphasize their luck: they both have a job (11% of the population is unemployed), their activity is declared (one third of the labor market is informal), and they have enough to eat (42% of Argentines live in poverty).

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Global phenomenon, driven by the recovery, inflation should mark the year 2021. If this generalized increase inflates Argentinian prices a little more, “Here, it has nothing to do”, sighs Marina Dal Poggetto, economist and director of the consulting firm EcoGo. “We record in a month what the world will perhaps experience in an entire year, itself exceptional”, she warns. Argentina and inflation continue an old story: on average, the annual price increase stands at 105%, according to a calculation by the Chamber of Commerce and Services carried out in 2018, covering … a century, a figure inflated by fever peaks, as in 1989 (+ 3,079%).

Deep mistrust of the national currency

“For more than ten years, Argentina has had inflation exceeding 20%, according to our records”, notes Matias Rajnerman, economist and director of the consulting firm Ecolatina. The pace has accelerated in recent years: + 47.6% in 2018, + 53.8% in 2019, during the second part of the mandate of the right-wing government of Mauricio Macri (2015-2019). The shutdown of the economy, due to the Covid-19 pandemic, has reduced inflation, which rose to 36% in 2020. However, prices have been skyrocketing in recent months and are threatening Alberto Fernandez’s government (center left) is already aiming to maintain inflation at 29% for 2021.

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