Everything gets hugely expensive except liquor: Inflation in this country has surged to 109%
The largest weighted category in the country’s index, food prices, experienced a surge of 10.1% from the previous month. Clothing, restaurants, hotels, and home goods exceeded the headline rate. The only exception was alcoholic beverages, which saw monthly price rises of less than 5%.
Argentina’s inflation rate has surged past economists’ expectations, with consumer prices rising 108.8% from a year ago in April, according to government data. This is the highest annual level in three decades and comes as the peso continues to plummet amid devaluation fears, driving costs even higher.
Food prices, which are the largest weighted category in Argentina’s index, saw a 10.1% jump from the previous month, while clothing, restaurants, hotels and home goods were all above the headline figure. Only alcoholic beverages saw prices rising less than 5% on a monthly basis.
The sharp increase in inflation comes after prices spiked in March, exacerbating a vicious cycle where the peso suffered a 13% selloff in parallel markets. This in turn prompted some Argentine savers to withdraw over $1bn of dollar deposits from the banking system last month. The peso’s volatility helped fuel additional price hikes during April.
Also Read: Will RBI extend pause in upcoming policies as April inflation eases to 18-month low?
Facing a rapidly worsening outlook, officials in Buenos Aires are looking to renegotiate Argentina’s $44bn programme with the International Monetary Fund, hoping to receive more money up front. However, the government is not complying with some of the key targets in the programme that are usually a benchmark for the IMF to approve any funds.
Argentina’s inflation crisis is taking place before presidential elections in October, with economists predicting a steep recession this year due to ever-rising prices and a historic drought that is ruining essential crop exports. The economy is expected to contract 3.1% this year, according to the central bank’s latest monthly survey.
Also Read: CPI inflation falls below RBI's upper tolerance limit for first time in 14 months, at 4.7% in April
President Alberto Fernandez has already announced that he will not seek a second term against the current economic backdrop. He has resorted to currency controls and price freezes to try to combat the crisis. More recently, he has had his regulators intimidate investors and analysts in the local market in an unsuccessful bid to cool prices. His ruling coalition has yet to announce a presidential candidate.
The inflation rate has alarmed investors, who fear a full-on currency collapse. The crisis has prompted many savers to shift funds out of the peso and into other currencies. The government is under pressure to take urgent action to avoid a financial meltdown.
(With agency inputs)
Catch all the Business News , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Business NewsNewsWorldEverything gets hugely expensive except liquor: Inflation in this country has surged to 109%
First Published:13 May 2023, 06:57 AM IST
- Top Gainers
- Top Losers
- 52 Week High