Homeless people remain with their belongings in front of a cosmetics store, on August 17, 2023, in Buenos Aires (Argentina). EFE/ Juan Ignacio Roncoroni

Poverty rises in Argentina as high inflation erodes incomes

Natalia Kidd

Buenos Aires, Sept. 27 (EFE). – A report released Wednesday by Argentina’s National Institute of Statistics and Censuses (INDEC) shows a bleak economic landscape as poverty rises, dragged by high inflation eroding household incomes.

Urban poverty in Argentina rose to 40.1 percent in the first half of 2023, its highest level in three years, thanks to a surge in inflation that has worsened in recent months and forecasts of further impoverishment in the year’s second half.

According to the INDEC report, the poverty rate in the year’s first half was 0.9 percentage points higher than the index registered in the second half of 2022 and 3.6 points higher than the rate in the first half.

Meanwhile, the extreme poverty rate in the year’s first half was 9.3 percent, 1.2 percentage points higher than the rate registered in the second half of 2022.

The measurement considers the standard of living in the country’s 31 most populous cities, where about 29.2 million people live.

However, it is estimated that 18.4 million people could be living in poverty and almost 4.3 million in indigence if the report were used to forecast the situation of the entire Argentine population of around 46 million.

The figures reveal a shocking reality: in just one year, 1.65 million people in Argentina fell below the poverty line, and some 230,000 entered the extreme poverty group.

The data released on Wednesday also shows that nearly 6 out of 10 children up to 14 are poor, and 13.6% cannot meet even their basic food needs.

Punished wallets

The increase in poverty in Argentina in the first half of 2023 coincided with a sharp acceleration in inflation, which increased by 50.7% in the first semester.

This substantially impacted the cost of the basic food and services basket that marks the poverty line.

The increase in the value of said basket was 52.4% in the first semester, and the rise in the price of food staples – which mark the poverty line – was 55.1%.

(FILE) Dozens of people participate in a protest called by the social organization Barrios de Pie on January 30, 2020, in front of various supermarkets in Buenos Aires (Argentina). EFE/ Juan Ignacio Roncoroni

In addition to inflation, the Argentine economy contracted by 1.9% in the year’s first half.

Although unemployment fell to 6.2% in the second quarter, there is still a lack of formal jobs and a large informal and self-employed sector.

These last two groups have lower incomes and are clearly losing the race against inflation, pushing thousands of people into poverty, even those with jobs.

According to official data, salaries in the year’s first half grew by 47.3% in the formal private sector and 41% in the informal private sector. Still, there is a significant loss of purchasing power due to higher inflation.

Bleak outlook

The information published on Wednesday is not only bad. It is an “old photo” of a social reality deteriorating economically during the second semester.

The 22% devaluation of the official exchange rate one day after the presidential primaries on August 13 resulted in a sudden inflationary jump of 12.4% compared to July and 124.4% year-on-year.

The jump in the value of the basic food basket in August was overwhelming – 17% compared to July and 94.4% year-on-year – suggesting a severe deterioration in social indicators for the second half of the year.

Inflation shows signs of slowing in September but still very high

Argentine Economy Minister Sergio Massa, a candidate in the October 22 presidential election, has taken several measures in recent weeks to mitigate the sharp drop in household income, but their impact is still unknown.

In this scenario, with forecasts for the coming months of inflation that will remain very high, added to an economic contraction, private consultants project poverty rates close to 42% by the end of 2023. EFE


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