Inflation slows down but does not let up in Argentina.
Prices increased 13.2% in February compared to January and 276.2% in the last twelve months, according to official data published this Tuesday.
Communication services (24.7%), transportation (21.6%) and housing, gas, light and electricity (20.2%) led the increases in February.
The increases in the last two sectors are linked to the elimination – in some cases total and in others partial – of state subsidies on household energy bills and public transport companies.
The measure was decreed by the Government of Javier Milei to reflect the real prices of the economy and eliminate the fiscal deficit, that is, prevent the State from spending more than it collects.
Food increased below the average in February, 11.9%, but in the last year it has become more expensive by almost 304% and has worsened the food emergency in Argentina: at least five million people, mostly children, They depend on aid to avoid going hungry.
In the midst of this food emergency, the Government of Javier Milei released the import of basic products this Tuesday and announced temporary tax exemptions to lower inflation.
Among the products that will have easy entry into the country are food, medicines, beverages, cleaning and personal hygiene products.
The Government ordered to accelerate payment to importers (they will be paid after 30 days instead of 120) and to suspend, for a period of 120 days, the collection of additional VAT and income tax.
Presidential spokesman Manuel Adorni noted that the measure “will contribute to greater competition and, consequently, a drop in inflation and the price level of these products.”
Potatoes, pork, coffee, tuna, insecticides and diapers are on the list of goods that the Government expects to decrease in value in the coming weeks.
In parallel, the Minister of Economy, Luis Caputo, has met with representatives of the main supermarkets to try to lower prices that he believes have increased “above inflation expectations.”
Chronic illness
Inflation is the main concern of Argentines and has become a chronic evil that successive governments have promised to eradicate without success.
The only one who achieved it in the last 40 years was the liberal Peronist Carlos Menem (1989 - 1999) through a convertibility system that tied the peso to the dollar and that was shattered in the midst of the economic and social crisis of 2002.
In December, Javier Milei's first month as president of Argentina, prices took the sharp jump of the last three decades, increasing 25.2% after the official devaluation of the peso by half.
In January, monthly inflation was 20.6% and this February, 13.2%.
The Government anticipates that in a couple of more months, the monthly increases will be in one figure and attributes the slowdown to the success of the shock therapy against the deficit applied in the last three months.
The flip side of this therapy—which has consisted of curbing monetary issuance and state spending—is the fall in economic activity and the collapse of consumption.
Argentina closed 2023 with a GDP decline of 1.6% and the International Monetary Fund predicts that this year the decline will be 2.8%.
In this recessionary and high inflation context, formal workers have lost almost 25% of purchasing power at the start of the year—informal workers even more so—and the cut in pensions exceeds 30%.
According to the latest official data, in mid-2023 four out of every ten Argentines were poor.
Poverty has grown since then throughout the country, and according to the projection of the Social Debt Observatory of the Argentine Catholic University, it approached 60% in January.
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