Argentina’s monthly inflation hits double digits

Photo: Byagos Muniz/Shutterstock

Inflation figures in Argentina constantly break records. INDEC, the country’s official statistics bureau, said prices jumped by 12.4 percent in August, the highest monthly increase in over two decades.

Argentina’s 12-month inflation now stands at 124.4 percent, a figure that is likely to go much higher in the short term. The effects of a 20 percent devaluation in August are likely to compound with larger depreciations of the peso later this year, when the presidential election season ends.

Argentina’s yearly inflation figures are already the highest since 1991, when the country was coming out of hyperinflation.

The numbers are another headwind for Economy Minister Sergio Massa’s presidential bid. Mr. Massa’s Peronist coalition got a mere 27 percent of the vote in August’s primary presidential elections.

The big winner of the night was libertarian economist Javier Milei with 30 percent of ballots, with the center-right coalition in second place with 28 percent.

Mr. Milei, who garnered fame by promising to “burn down” Argentina’s central bank, calls for a dollarization of Argentina’s economy to cap inflation.

Meanwhile, Center-right candidate Patricia Bullrich announced Carlos Melconian as her economy minister, promising to enact an economic program that Mr. Melconian designed along with some of Argentina’s most influential think tanks.

Mr. Melconian has been touring Argentinian TV since Mr. Milei’s win, arguing that dollarization is impossible. He insists that inflation issues can only be solved through cohesive fiscal policy, the country needs to spend less than it earns. But, Mr. Milei remains adamant on the issue.

Concurrently, Mr. Massa announced the elimination of value-added tax for low earners who purchase basic products with debit cards, in a bid to counteract some effects of rising inflation.

Private estimates show inflation in September is likely to remain near two digits, as the effects of the devaluation continue to show.

Ignacio Portes

Ignacio Portes is The Brazilian Report's Latin America editor. Based in Buenos Aires, he has covered politics, macro, markets and diplomacy for the Financial Times, Al Jazeera, and the Buenos Aires Herald.