Inflation continues to rise: Prices were up 4% in January

Argentina’s inflation rate shows no sign of decreasing. The INDEC national statistics bureau reported Thursday that prices rose by four percent in January, equal to the rate registered in December.

Telecommunications and food prices were among the products accelerating the quickest, the data watchdog said.

The news will do little to dampen fears that Argentines are set to face a year of soaring costs, with private economists predicting that inflation in 2021 will outstrip last year’s rate of 36.1 percent. Over the last 12 months, prices have risen 38.5 percent, according to INDEC’s data.

In its 2021 Budget, the Alberto Fernández administration predicted a rate of 29 percent, though the most recent Central Bank survey of market expectations predicted that prices would rise by 50 percent by the end of the year.

Argentina has been struggling with runaway inflation for years. In 2019, prices rose by 53.8 percent. Last year’s figure, 36.1 percent, was tampered by the coronavirus pandemic that paralysed the economy. GDP likely contracted by around 10 percent in 2020, according to preliminary estimates.

Consumer prices have accelerated in recent months: this is the fourth consecutive month that consumer prices have risen by at least three percent, and economists surveyed by the Central Bank anticipate that the trend will continue during the first half of 2021.

In January, the biggest increases were registered in telecommunications (up 15.1 percent), restaurants and hotels (up 5.4 percent) and food (up 4.8 percent). The lowest price variations were registered in the housing, water and electricity (up 1.1% percent).

Two fuel increases in January caused transportation prices to rise 4.6 percent from the previous month.

High inflation could pose a challenge to the government's plans to slowly devalue the peso this year. Officials want to gradually depreciate the peso by about 25 percent nominally this year to 102 to the dollar in December, according to a statement from the Economy Ministry sent on Wednesday. The peso was allowed to devalue at a slightly faster rate in January due to higher inflation, the statement added.

– TIMES/BLOOMBERG/AFP