Inflation accelerated last month in Argentina at the fastest pace in 18 months, threatening to derail the fragile economic recovery six months before key midterm elections.
Consumer prices in Argentina rose 4.8 percent in March from February, according to data released by the INDEC national statistics bureau on Thursday.
The monthly figure was the highest since September 2019. Annual inflation reached 42.6 percent in March. Prices have now risen 12.4 percent in the first quarter
The monthly figure outpaced the expectations of specialists. Economists consulted by Bloomberg had forecast a median 4.2 percent. Other private estimates had put the figure between 3.6 and 4.1 percent, following high rates in January (4 percent) and February (3.6 percent).
Economy Minister Martín Guzmán predicted Wednesday that inflation should cool in April after reaching its peak for the year last month, though he conceded that March’s data would be “the highest of the year.”
According to the consumer price index, increases were led by a 28.6 percent surge in education. Clothing and footwear jumped 10.8 percent. Food and beverages increased 4.6 percent, with meat rising 5.9 percent and dairy products up 7.2%.
Double-digit inflation has been a persistent problem for recent administrations in Argentina.
Inflation hit 36.1 percent last year, after reaching 53.8 percent in 2019.
To combat it, President Alberto Fernández’s government has relied on unorthodox tools including price caps and agreements, rejecting traditional monetary options used by most countries.
Despite that, in its 2021 Budget, the Casa Rosada predicted inflation would reach 29 percent this year – a target that now looks all but unreachable. In the most recent market expectations survey from the Central Bank, experts forecast an annual rate of 46 percent.
The recent price spike comes as the government is implementing new restrictions to fight record Covid cases, itself a threat to Argentina’s economic recovery. On Wednesday, the government ordered stricter enforcement of price controls and said it would hire as many as 500 inspectors to ensure businesses are complying with regulations.
Guzmán asked for “more cooperation” by companies to try to reach the government’s 29 percent annual inflation target for the end of 2021.
The clampdown on prices has also led to an uneasy relationship between Fernández’s government and businesses. US companies recently asked his administration to ease up on price controls, calling the regulatory environment “hostile, restrictive and unpredictable.”
Argentina’s economy, which has been in recession since 2018, contracted 9.9 percent last year during the coronavirus pandemic.
Banks and consulting firms believe gross domestic product (GDP) will rebound 6.7 percent, slightly lower than the seven percent predicted by the Economy Ministry. The International Monetary Fund projects economic growth of 5.8 percent in 2021.