A man throws a box at the Central Fruit and Vegetable market in Buenos Aires, Argentina, 13 April 2023. EFE/Juan Ignacio Roncoroni

Inflation still raging as Argentina heads to the polls

Natalia Kidd

Buenos Aires, Oct 12 (EFE).- Inflation in Argentina continued to grow at a double-digit monthly rate in September, reaching 138.3% year-on-year, its highest level in three decades—a turbulent economic scenario on the eve of the presidential elections on October 22.

According to the National Institute of Statistics and Censuses, the consumer price index rose 12.7% over August, the highest rate since February 1991 (27%), two months before Argentina adopted the “convertibility” regime between the peso and the US dollar after the hyperinflation of 1989-1990.

The price increases in September were generalized, but the 14.3% increase in food prices was alarming, as it directly impacts poverty and indigence, which are already high in Argentina.

The official inflation figure for September was higher than that predicted by private consultants, and the behavior of prices in October is currently under discussion.

September’s monthly rate represents an acceleration from August’s 12.4% index, when prices surged following the 22% devaluation of the official exchange rate on August 14, the day after the presidential primaries.

Argentina does not have a free-floating currency, and instead, the government imposes a series of currency controls, import restrictions, and price freezes, resulting in a dozen different legal and informal exchange rates.

The sharp rise in the informal exchange rate in recent days raises the prospect of rapid contagion to real economy prices amid growing investor anxiety over the outcome of the October 22 elections.

“This week’s free dollar rise will impact price formation. The widening exchange rate gap has already led to price corrections in the past,” the LCG consultancy said in a report.

According to the official report released this Thursday, inflation has already increased by 103.2% in the year’s first nine months.

The latest private forecasts collected monthly by the central bank pointed out that inflation will accumulate this year at an increase of 173.2%. Still, with the data released this Thursday, consulting firms are beginning to revise their projections upward.

“The key factor for the last quarter of the year is political. Depending on the election results and the candidates’ reaction, uncertainty will begin to decrease, and expectations will improve, or vice versa,” said EFE Eugenio Marí, chief economist of the Fundación Libertad y Progreso. EFE