Argentina begins 2024 with an inflation of 20.6% in January and a year-on-year inflation of 254.2%

Argentina has started 2024 with inflation of 20.6% for January. After closing 2023 with a 211.4% price increase, the highest rate in the world, surpassing Lebanon and Venezuela, Argentina's year-on-year inflation reached 254.2% in January. The increase in prices in January, unprecedented in the world, has been for Argentina a slowdown of almost five points compared to December, which reached 25.5% – a record in 30 years – in a month marked by the presidential transition .

The inflation data for the first month of a Government led by Javier Milei alone reflects the price increases after the liberalizations and devaluation imposed by the new Government in mid-December. Goods and services have increased by 40%, transportation by 26%, and both health and food have exceeded 20%. The Argentine Government, which completed two months in office last week, is “very enthusiastic” about the work it has been doing to attack inflation, according to what presidential spokesman Manuel Adorni said this Wednesday, remarking that “clearly there is still a long way to go.” ” to “feel some satisfaction with these numbers.” Argentines, meanwhile, face unleashed prices with their purchasing power on the floor. According to the index that measures the salaries of formal workers – just over half of Argentines of working age – the purchasing power of Argentines fell 13% in December alone, the worst figure since 2002. The index carries six years down while the minimum wage in Argentina today is equivalent to about 150 dollars, the worst in the region only ahead of Venezuela.

Argentina faces a bad start to the year immersed in unknowns. The Government of Javier Milei suffered its first political defeat last week when it withdrew from Congress its great law to dismantle the State destined to fail in the vote. The text, of almost 400 articles, had been approved in general by a part of the opposition that saw the urgency of the reforms, but it failed in the vote on each article in particular. On February 6, when the deputies sat down to discuss it and disapproved half of the first 13 reforms, the ruling party decided to suspend the discussion and Milei launched a witch hunt, pointing out one by one the deputies who had sat down to negotiate. the law, but they refused to sign him a blank check and give him special legislative powers in the private vote.

From Rome, where he had just arrived on an official visit, Milei presented his defeat as an antagonism between his Government and that “political caste” that “the only thing it does is guarantee the status quo in exchange for personal business.” “They will have to choose which side they are on. The Argentines already know which side we are on and we are going to sue them,” he wrote in a tweet on February 9. It was his most institutional reaction after days of fury in which he disseminated photographs and data of wayward legislators and encouraged insults from his followers towards other political parties on social networks. Feeling betrayed by the provincial forces that let go of his hand in Congress, Milei ended last week firing officials such as the Secretary of Mining and the director of the Social Security administration, due to his political ties.

Legislative blocs such as the center-right Radical Civic Union, or the federal independents grouped in a large coalition, have endured the president's insults for weeks to negotiate the reforms. Sandwiched between the new far-right government and an opposition led by Peronism, these blocks preferred to negotiate despite the mistreatment so as not to be stuck with the rejection of the law promoted by the Peronist opposition, which has just lost the elections.

With the failure of the law, and after the end of the extraordinary sessions in Congress, which will stop the assemblies this Thursday to begin their official calendar in March, the great reform of the new Argentine Government has been left up in the air. Milei has threatened to seek to have his law approved by referendum, supported by the 56% of the votes with which he won the presidency in a second round in November last year, but the path his reforms will follow is today a mystery.

The moment has given air to the opposition. This Wednesday, after a silence of more than half a year, the former president (2007-2015) and vice president of the last Peronist Government (2019-2023), Cristina Kirchner, returned to the public scene with a monograph in which she states that Argentina is in the door to “its third debt crisis” in 40 years of democracy and opposed Milei's fiscal measures, pointing out that the country's inflationary crisis is not a product of the fiscal deficit, but of debt in dollars. Milei, according to the last great leader of Peronism, has as its only plan a “destabilization that not only feeds back the inflationary spiral, placing society on the brink of shock, but will also inevitably cause an increase in unemployment and social desperation in a sort of of planned chaos.” “It is more than evident that in the resident's head the only stabilization plan is dollarization. The measures adopted are not explained in another theoretical framework,” wrote the former president who, however, opened the discussion to some reforms.

“We agree that Argentina must review the efficiency of the State, and that the slogan of the 'present State' is not enough to solve the country's problems, which are too many,” wrote Kirchner, and proposed, in line with the new Government, the need for a “labor update”, for a “tax simplification”, to discuss the “integration” of private capital in State companies and to “rethink” the public health system. However, Kirchner put a red line on dollarization. It's not the only one. According to a large part of the opposition, it is Milei's only plan in the face of a crisis that this Wednesday has added another wound.

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