Argentina doubles inflation in one year, rising to 94.8% in 2022.

inflation in argentina It nearly doubled in 2022 to close at 94.8% year-on-year, rising to an unprecedented high since the end of the South American country’s last hyperinflation, according to the Argentine National Institute of Statistics and Censuses (INDEC) on Thursday. 30 years ago. years old.

inflation Accumulated as of December 2022, it was based on a 2021 high of 50.9% and accelerated markedly from 85.3% last November due to the impact of the war in Ukraine on food prices and energy resources in the domestic market. macroeconomic deterioration and political uncertainty are caused by changes in the Ministry of Economy in the middle of the year, private analysts say.

On a monthly basis inflation December 2022 rose to 5.1% from 4.9% recorded in November last year, breaking the downward trend from the monthly peak of the year, 7.4% reached in July last year and 6.7% last March, due to the impact of these internal and external “shocks.”

Both goods and services were up 5.1% last month compared to November, data that rose to 97.9% and 86.8% respectively year-to-year.

The sectors that grew above average in December were “Restaurants and Hotels” (7.2%), followed by “Alcoholic Beverages and Tobacco Products” (7.1%), while growth in home services affected “Home Appliances and Service » (5.9%). %); fuel in the “Transport” category (5.8%), private medicine in the “Health” category (5.7%).

Meanwhile, growth in Food & Non-Alcoholic Beverages (4.7%) had the biggest impact on most regions, highlights the INDEC index, which is up 95% year-on-year.

structurally high

Another factor that analysts say has been key to boosting inflation in 2022 is the market cap on public sector funding, forcing the central bank to act as a lender of last resort.

“Demand for the peso, the local currency, is low. Our currency is not a safe haven for value. And any surplus of money that comes from having to issue to the Treasury or buy dollars easily becomes inflationary pressure, which is added to other factors. that cause inflation,” he explained. EFE Abeseba’s head of economics, Elisabeth Basigalupo.

Inflation in Argentina it is structurally high and unrelated to the current global recovery: “In short, this recurring history of bad macroeconomic policies is generating a strong distrust of the value of the currency,” Basigalupo said.

high expectations

Alberto Fernandez government forecast for the 2023 budget inflation 60%; Meanwhile, Economy Minister Sergio Massa said over the weekend that “the goal is to be ahead of 3 (monthly percent) in April (next).”

But the latest survey conducted by the Central Bank among private analysts showed that Argentina will close 2023 with 98.4% inflation, while monthly inflation expectations in April next year are 6%.

Experts note that 2023 has started with a maximum threshold for price growth, and they do not foresee a stabilization program instructing fiscal and monetary policies to contain market inflation expectations.

According to Santiago Manoukian, head of research at consulting firm Ecolatina, “inertia is the great enemy” of more government spending cuts and less central bank bailouts for the Treasury that the economic team is trying to implement. companies, individuals and unions will continue to encourage it “adjusted based on past inflation” to protect themselves from chronic inflation that “does nothing but reinforce this momentum”.

Manoukian added that “expectations for devaluation have not completely disappeared” and “an uncertainty typical of an election year” in 2023 as presidential elections are held to coordinate the downward inflationary expectations of Argentines.

(As reported by EFE)