A man updates the prices of products in a market in Buenos Aires. Enrique García Medina (EFE)
Argentina registered in 2021 an inflation of 50.9%. The official data released this Thursday confirms what the population has felt for months in their pockets: prices are rising non-stop and wages are increasingly enough for less. However, unlike what has happened in many countries around the world, the figure has not been the worst in recent decades. It is slightly below the 53.8% registered in 2019 and shows that in Argentina the high inflation of 2021 was not a one-time event associated with the official stimulus plans with which to counteract the consequences of the covid-19 pandemic, but rather a endemic evil to which the government of the Peronist Alberto Fernández does not find a way to put a stop to it.
The prices of restaurants and hotels led the annual rise, with increases of 65.4%. After the hard blow suffered by the tourism and gastronomic sector in 2020 due to the restrictions imposed to stop the coronavirus, in 2021 the businessmen rushed to try to recover their profits. They were closely followed by the textile sector, with increases in clothing and footwear of 64%. The control of food prices imposed by the Government in the final stretch of the year contributed to these falling below general inflation. The Executive forced the industry to freeze the values of hundreds of products on the supermarket shelves. For beef, essential in the Argentine diet, it also imposed export restrictions.
If in 2019 one of the main causes of the price escalation was the sharp devaluation of the peso against the dollar (almost 40%), two years later, many eyes point to the extremely high monetary issue: it exceeded one and a half billion pesos. However, inertia also has a decisive influence. Accustomed to high inflation, companies raise prices early to maintain their profit margin. In turn, the unions demand similar salary increases, which closes the vicious circle.
The prospects for this 2022 are not optimistic. In the budget project that was rejected by Congress, the government estimated inflation at 33% for this year, but private analysts believe it will be much higher. In order to contain prices, last year the Executive prohibited increases in electricity, gas, water and transport rates, limited food and fuel increases and sold reserves to moderate the devaluation of the local currency. Pressure from the International Monetary Fund to reduce the growing fiscal deficit and put the accounts in order in exchange for a debt restructuring agreement of 44,000 million acquired with the organization in 2018 will prevent it from repeating the strategy this year and will affect prices.
Inflation especially punishes the most vulnerable population, the one that is not protected by a formal job, but rather lives off informal or part-time jobs.
During the three years of recession in Argentina, between 2018 and 2020, poverty grew 10 percentage points, to 42% of the population, and child poverty approached 60%.
The recovery that began in 2021 has had little impact on reversing the situation.
In the middle of last year, according to the latest available official data, four out of ten Argentines still had insufficient income to cover their basic needs.
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