Argentina's Inflation Rate Hits Three-Decade High, Crossing 100 Per Cent

Argentina's Inflation Rate Hits Three-Decade High, Crossing 100 Per Cent

by Swarajya Staff - Wednesday, March 15, 2023 11:00 AM IST
Argentina's Inflation Rate Hits Three-Decade High, Crossing 100 Per CentArgentina President Alberto Fernandez.

Argentina's annual inflation rate has surpassed 100 per cent for the first time since 1991, marking a three-decade high and revealing the government's insufficient efforts to control rising prices in the country.

In February, prices surged 6.6 per cent in Argentina, causing the 12-month figure to escalate to 102.5 per cent, with the inflation rate reaching its highest level since the 1990s hyperinflation crisis.

As per the government statistics agency Indec, the country's inflation rate is among the highest globally.

Tuesday's data complicates matters for President Alberto Fernandez's centre-left administration, as they aimed to relieve financial strain on voters before a challenging election in October.

Inflation tops the list of concerns for Argentines, followed by corruption and poverty, per polls.

Price hikes have been linked to an increase in money-printing by central banks and Russia's conflict in Ukraine.

In three years, the circulation of funds has surged by four times under Fernandez's governance, as reported by the central bank.

After Zimbabwe, Lebanon, Venezuela and Syria, Argentina has the world's fifth-highest inflation rate, with triple-digit inflation recorded in those four countries last year.

Economists predicted high inflation throughout 2023 and doubt government measures will control it.

The Argentine state has instituted a temporary freeze on over 1,700 goods through a price control scheme called Precios Justos or "Fair Prices" until December.

However, this has not been sufficient to combat the increasing prices due to severe economic imbalances in the country.

Despite introducing similar price controls earlier in 2021, prices remain high, and consumer sentiment continues to decline.

International Monetary Fund (IMF) urged Argentina to tackle inflation more effectively to ensure its $44 billion programme with the organisation remains intact.

Severe drought in South America has destroyed crops and hurt agricultural exports, causing "policy setbacks", warns the IMF.

Net foreign currency reserves in the country remained around $4.2 billion in February, as per private analysts.

Due to war in Ukraine and exceptional weather conditions, Buenos Aires has been asking the IMF executive board to be more lenient by lowering the bar on previously agreed targets.

IMF's executive board still needs to approve it, but Argentina is set to receive $5.3 billion this month.

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