Inflation in Argentina reached 8.3% in October and 142.7% year-on-year, 4.4 points more than the accumulated figure for the previous month. If measured since January, prices have risen 120%, the highest percentage in Latin America after Venezuela. The figures, however, have been good news for the Government of Peronist Alberto Fernández. After two months with inflation above 12%, he has celebrated a more pronounced slowdown than expected with just six days left until the second round of the presidential elections. Containing inflation is a particularly relevant issue for the Peronist candidate, Sergio Massa, who as Minister of Economy prefers to avoid the dissemination of unfriendly data during the campaign.
The rise of the CPI was especially high in communications (12.6%), clothing and footwear (11%) and home equipment and maintenance (10.7%). Food, the item that most impacts the lower and lower middle classes, was just below average, at 7.7%. The increase in the cost of housing remained at 7.8%. The spike in rents, which are already quoted in dollars, was not reflected in its full magnitude by the freezing of rates for electricity, gas and water services, which add up to the same item. The start of the month was marked by the rebranding of food due to the end of sectoral agreements that kept the prices of key products such as meat unchanged. There were also increases in fuel, an item that ends up impacting the rest of the sectors of the productive chain.
Argentine monthly inflation jumped from 6.4% in July to 12.4% in August and 12.7% in September, due to the 18% devaluation that the Central Bank applied to the peso the day after the mandatory primary elections held on August 13. Sergio Massa, the candidate minister, had come third, behind the conservative Patricia Bullrich and the far-right Javier Milei, and the devaluation of the peso was already taken for granted even before those discouraging results for the Casa Rosada. The fall in the value of the currency was immediately reflected in prices and the CPI set record figures for two months in a row. October reflected the deceleration of this inflationary inertia, although the 8.3% released this Monday is the fourth highest in the annual range.
Inflation has been the issue that most worries Argentines for years, even above insecurity or corruption. Controlling it will be the main challenge of the next Government, whatever it may be. Massa, the architect of the current outbreak, attributes it to the effects of the worst drought in 40 years, which reduced the income of foreign exchange from exports from the countryside by more than 20,000 million dollars. The official story also includes the agreement to refinance the debt of 44,000 million dollars contracted by the Government of Mauricio Macri before the International Monetary Fund. For the ultra Javier Milei, Massa’s rival in the second round, neither the drought nor the IMF is to blame, but rather the uncontrolled issuance of currency, so much so that in his electoral platform he promises to “annihilate” inflation by “dynamiting” the Central bank.
Massa and Milei faced each other last Sunday in the last presidential debate before the elections. Inflation, however, was barely in the discussions. The Peronist candidate managed to evade the issue, his weakest point in the campaign. Milei missed the opportunity to attack the Peronist, engrossed as he was in answering the questions that his rival repeatedly fired at him. At the end of the day, the Argentines did not find out about the contenders’ strategies to control the rise in prices.
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