Pressure is growing on President Alberto Fernández's government to tackle runaway price hikes after the INDEC national statistics bureau revealed an April inflation rate of six percent.
Last month’s cost of living increase means that prices have risen 23.1 percent so far this year, producing an annual inflation rate for the last 12 months of 58 percent – one of the world’s highest indices.
The data, released Thursday, came as tens of thousands of protesters flooded into the streets of Buenos Aires for a huge protest at the Casa Rosada. The so-called ‘Marcha Federal Piquetera’ saw left-wing groups and social organisations mobilise in massive numbers to demand greater support for Argentina’s poor, including improved wages, food aid and jobs.
Opposition critics also let rip, with UCR lawmaker Mario Negri accusing the government of "liquefying wages, pensions and debt in pesos" by printing money.
Libertarian deputy and economist José Luis Espert slammed the government for creating "a factory of poverty" and said it was “ignoring science and reality that says that inflation is a monetary phenomenon.”
From Paris, where he is on a European tour, President Alberto Fernández was quick to blame the Ukraine war for rising prices.
"A percentage of that inflation derives from food price increases as a consequence of the war," he told the press on Thursday, even though food and beverages clocked in just below the general average at 5.9 percent (but 62.1 percent for the year).
As in previous months this year, the item of garments and footwear was the leading culprit at 9.9 percent (with an annual rate of 73.4 percent). The textiles sector is highly protected, giving it more latitude to increase prices.
Other sectors above the average were restaurants and hotels at 7.3 percent (also 73.4 percent for the year) and health at 6.4 percent (58.5 percent).
Although most sectors were below the average, core inflation (excluding seasonal and regulated prices) was 6.7 percent.
The immediate reaction to the April rate was rapid, with some experts warning that price increases this year could total close to 70 percent. One, economist Luis Palma Cané, even estimated that inflation “is going to far exceed” 80 percent this year. By year’s end, he assured, the country could be “on the brink of hyperinflation.”
“Inflation is going to have a growing trend, which is destroying the economy. This year it is going to exceed 80 percent by far and we are going to be on the verge of hyperinflation,” he warned, saying the main cause of the increases is Argentina’s “enormous fiscal deficit.”
A recent Central Bank survey of economists and consultants forecast an annual inflation of 65 percent for this year, but even this looks like falling short.
Nevertheless, April’s figure results were within expectations since most private consultants had tipped just under six percent, while some government sources had already anticipated that figure. Economy Minister Martín Guzmán, according to reports, was hoping it would come in at just under six percent.
The data all but extinguishes the government’s stated target of 38 to 48 percent annual inflation contained in its recent agreement with the International Monetary Fund (IMF). An annual inflation of 58 percent is also perilously close to the peak wage increases arising from collective bargaining where 60 percent for bank clerks set the pace.
“The economic programme will help to decelerate inflation, of that we’re sure. We’re not happy, we’re far from happy with the inflation today in Argentina,” President Fernández told reporters at Argentina’s Embassy in France on Thursday.
The inflation announcement comes just before the IMF is due to start its quarterly review of compliance with the agreement to reschedule the debt of US$44 billion contracted by the preceding Mauricio Macri administration in 2018.
“We must continue to work on this. Our economic programme has three pillars: production, work and better income distribution. We are growing a lot in the economy, generating many new formal jobs, but income distribution is costing us a lot, and inflation has a lot to do with that,” Fernández said.
"Inflation is very harmful, because it affects the less well-off the most,” he concluded. “Inflation is the tax that is levied on those who live on a salary. And therefore we must quickly stop this problem.”