BUENOS AIRES, Argentina (AP) — Consumer prices in Argentina soared 12.4% in August, compared to the previous month, the highest rate since February 1991, a number that puts the government on the defensive a little more than a month before presidential elections in which a right-wing populist who admires Donald Trump appears the favorite to win.
Argentina’s annual inflation rate rose to 124.4%, according to figures released by the government’s INDEC statistics agency Wednesday.
Argentina has been suffering from galloping inflation for years, but August marked the first time in more than two decades the monthly rate reached double digits, a phenomenon that is likely to be repeated in September, according to economists.
Amid the sharp rise in consumer prices, Economy Minister Sergio Massa is trying to convince Argentines to elect him president rather than Javier Milei, a self-described “anarcho capitalist” who shook up Argentina’s political system by receiving the most votes in last month’s national primaries.
“It’s the number that summarizes the tragedy left by Massa,” Patricia Bullrich, the presidential candidate for the main opposition coalition, wrote on social media after the inflation number was released.
Recent polls show Milei leading ahead of general elections on Oct. 22 with Massa in second place and Bullrich third.
The high inflation rate is in large part a product of the government’s devaluation of the local currency, the peso, by nearly 20% following the Aug. 13 primaries.
“The acceleration (of inflation) is the pass through of the devaluation,” said Martín Kalos, an economist who is a director at local consultancy Epyca Consultores. “The number isn’t higher because the devaluation only captured 15 days of August. That’s why the floor is high for September.”
Inflation in August was particularly high for food items, which increased 15.6% from July with the price of some beef cuts soaring by as much as 40%, according to INDEC.
The real increase that consumers saw in retail outlets was likely even higher.
The price of beef to consumers increased between 40% and 70% since July, according to Diego Ponti, a livestock analyst for AZGroup, a local consultancy. Ponti said the sharp rise in prices had to do with a confluence of factors including the way that beef prices had largely remained frozen for months despite the inflationary economy.
Mariela Suchowieski, 18, has been seeing the effect of the price increases on her diet.
“We don’t even buy beef anymore. We buy it once a month and we divide it up bit by bit,” she said. “Everything is very expensive.”
Suchowieski reflected on the effects of rising prices while she attended a rally for Milei on Tuesday in La Plata, a city some 60 kilometers (37 miles) southeast of Buenos Aires. Hundreds had gathered to celebrate the man who has said the answer to Argentina’s inflation woes is to adopt the U.S. dollar as its official currency.
An exultant Milei signed his autograph on 500-peso bills, which are worth less than $1 in the black market, a reflection of how the local currency has depreciated over the past year.
Around him supporters who treat Milei like a rockstar expressed anger at the current political leadership.
“Everything was done wrong,” said Juan Pedro Aquino, 61, who blamed the country’s problems on politicians’ access to what he called the “little machine,” a reference to their penchant for printing money, which is one of Milei’s rallying cries.
That anger at the government is proving to be a particular challenge to Massa, who has unveiled measures to try to raise the purchasing power of salaries.
“Massa is a candidate who carries the burden of being a minister,” Kalos said. “He is a presidential candidate who must find a balance between the response to the crisis he has been unable to provide as a minister and promising that he could deliver them as president.”
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AP journalist Natacha Pisarenko contributed to this report.
FAQs
BUENOS AIRES, Argentina (AP) — Consumer prices in Argentina soared 12.4% in August, compared to the previous month, the highest rate since February 1991, a number that puts the government on the defensive a little more than a month before presidential elections in which a right-wing populist who admires Donald Trump ...
Why does Argentina keep having high inflation? ›
Some attribute it to excessive money printing and government spending; others point to the rise of the dollar. Many others blame inflation itself: prices go up because there is inflation, in a self-perpetuating spiral. Inflation forms an integral part of Argentina's collective memory.
Why is Argentina in an economic crisis? ›
After recovering from the pandemic, the economy fell back into a recession in the fourth quarter of 2022, and a new drought made things worse. The economy is expected to contract by 2 percent in 2023, the Central Bank has exhausted its international reserves, and inflation is expected to reach 210 percent in 2023.
Why is Argentina's interest rate so high? ›
The South American country's interest rate is currently at 133%, one of the highest levels in the world in a bid to bring down triple-digit inflation and encourage people to keep savings in the local peso currency despite rapid depreciation. Two sources had earlier said a rate hike was on the cards.
Which country has the highest inflation rate in the world? ›
Venezuela is the country with the highest inflation in the world, with an increase in consumer prices estimated at 360 percent in 2023, according to the latest figures from the International Monetary Fund (IMF), published in October.
What is Argentina doing to fight inflation? ›
Milei, battling an inherited crisis, has rolled out some tough measures to combat inflation, including painful cuts to state spending, targeting subsidies for things like utilities and transport, while looking to streamline welfare programs.
How bad is Argentina's inflation? ›
Since Javier Milei took office, inflation climbed more than 100 percentage points, from 160% in the 12 months to November 2023 to 276% in the 12 months to February 2024.
What is going on with Argentina's economy? ›
Its economy is shrinking, in part because of a ruinous drought. In the past five years, its currency has lost about 90% of its value against the U.S. dollar. Its debts, including $45 billion that it owes the International Monetary Fund, are suffocating. One in four Argentinians lives in poverty.
Why is Argentina becoming poor? ›
Former Vice President Fernández de Kirchner (2019-2023), who also governed between 2007 and 2015, attributed the poverty problem largely to the policies of conservative President Mauricio Macri (2015-2019), who succeeded her in office, and to the adjustments applied by the current administration.
Is Argentina getting poorer? ›
According to the Catholic University of Argentina's social debt observatory, 57.4% of the population struggles to cover the cost of food and basic services. This is the highest poverty level since the observatory began monitoring in 2004, and the report warns things could get worse in February.
Stagnation (1975–1990) From the Rodrigazo in 1975, inflation accelerated sharply, leading to several redenominations of the Argentine currency. Between 1975 and 1990, real per capita income fell by more than 20%, wiping out almost three decades of economic development.
What is Argentina's biggest inflation? ›
BUENOS AIRES, Feb. 14 (Xinhua) -- Argentina registered a year-on-year inflation rate of 254.2 percent in January, the highest in 32 years, according to data released Wednesday by the National Institute of Statistics and Censuses (INDEC).
What country has a 97% interest rate? ›
The Central Bank of Argentina raised its key interest rate Monday by six percentage points to 97% in an effort to tackle soaring inflation that has reached 30-year highs.
What country had the worst inflation ever? ›
Between the end of 1945 and July 1946, Hungary went through the highest inflation ever recorded. In 1944, the highest banknote value was 1,000 P. By the end of 1945, it was 10,000,000 P, and the highest value in mid-1946 was 100,000,000,000,000,000,000 P (1020 pengő).
What is the best country with no inflation? ›
World's Lowest Inflation Rates
| Rank | Country / Region | Date |
|---|
| 1 | 🇸🇸 South Sudan | Dec 2022 |
| 2 | 🇲🇴 Macau | Nov 2022 |
| 3 | 🇨🇳 China | Dec 2022 |
| 4 | 🇭🇰 Hong Kong SAR | Nov 2022 |
6 more rowsFeb 16, 2023
Many of the lowest inflation rates around the world are located in Asia, including Macau, China, Hong Kong, and Taiwan.
What is the problem with Argentina's currency? ›
In the past five years, its currency has lost about 90% of its value against the U.S. dollar. Its debts, including $45 billion that it owes the International Monetary Fund, are suffocating. One in four Argentinians lives in poverty.
How did Argentina go from rich to poor? ›
its transit of wealth to poverty could be summarized in the succession of three major stages: boom and development thanks to globalization, monetary stability and economic liberalization (from the mid-nineteenth century to the first third of the 20th century); the period between the wars, from 1930 to 1945, where the ...
Why does Argentina keep printing money? ›
Argentina has a long history of printing money to compensate for government overspending. That's produced long periods of high inflation, even hyper-inflation.
Why South America has high inflation? ›
Sociopolitical instability in many Latam countries has also contributed to currency weakness. Wage indexation and severe drought in the region affecting food prices and hydroelectric generation have also boosted inflation, on top of the universal increases in food and fuel prices as a result of the war in Ukraine.
