Inflation in Argentina has reached alarming levels, with a rate of 254.2% in the span of just 12 months, making it one of the highest interannual variations in the world. The country experienced a slight slowdown in January, with the indicator dropping to 20.6%, down from 25.5% in December.
The January consumer price index falls in line with previous estimates made by the government, which predicted a rate of around 20%. This comes in the midst of what President Javier Milei refers to as a “stagflation” situation, characterized by economic stagnation accompanied by high inflation. These concerns were raised shortly after Milei assumed office.
The past year has been particularly challenging for Argentina’s economy. In December, the country experienced a 50% devaluation of the peso, which led to the release of almost all prices in the economy and the first adjustments to transport and public service tariffs. These factors have contributed to the ongoing issue of high monthly inflation, with figures remaining close to the historical record set in February 1991.
Several sectors have been hit hard by rising prices. Goods and services saw a significant increase of 44.4% in January, followed by transportation (26.3%), communication (25.1%), and food and non-alcoholic beverages (20.4%).
The impact of high inflation on the population cannot be ignored. Many Argentinians have had to make significant adjustments to their lifestyles and spending habits. For example, Elsa González, a 74-year-old retiree, stated that she can no longer afford cheese and meat. Ramón Zamudio, a 70-year-old janitor, revealed that he has had to cut down on his medication due to increased prices.
The government is taking steps to address the issue. Economy Minister Luis Caputo has expressed optimism that inflation will decrease in the coming months. He believes that the government’s efforts in fiscal, monetary, and exchange rate matters will have a positive impact on reducing inflation.
However, Milei, who has been at the forefront of the government’s economic policies, suffered a major defeat when he failed to pass legislative changes in Argentina. Despite his efforts to deregulate the economy and reduce the role of the state, the courts temporarily suspended the application of his labor chapter. Furthermore, his proposed “Bus Law,” which consisted of over 600 articles, did not receive approval in Congress.
The impact of high inflation is also being felt among workers, leading to calls for higher wages. The CGT, the country’s main trade union federation, organized a 12-hour general strike in January and is demanding an 85% increase in the minimum wage, which is currently set at 158,000 pesos.
To add to the challenges, the latest data from Indec shows that the basic food basket in Argentina is priced at 285,561 pesos, while the total basic food basket stands at 596,823 pesos. These figures highlight the growing struggles faced by many Argentinians to afford basic necessities.
In light of these circumstances, the Argentine government is determined to take additional measures to achieve its goal of a “zero deficit” this year. Economy Minister Luis Caputo plans to implement executive measures that will help meet this commitment, including reactivating a credit program worth 44 billion US dollars.
As Argentina grapples with high inflation, the government faces significant challenges in stabilizing the economy and ensuring a reasonable cost of living for its citizens. It remains to be seen how successful their efforts will be in curbing inflation and restoring economic stability.
