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ECONOMY | 12-08-2021 18:49

Inflation in Argentina cools as government slows peso depreciation

Inflation in Argentina cooled for the fourth consecutive month in July, as the government tightened its grip on the daily depreciation of the peso.

Inflation in Argentina cooled for the fourth consecutive month in July, as the government tightened its grip on the daily depreciation of the peso.

Consumer prices rose three percent in July from June, in line with economists' expectations, according to government data released Thursday. Compared to the same month of the previous year, inflation reached 51.8 percent, the highest level since January 2019, which was the first full month of President Alberto Fernández's term in office.

Inflation has slowed in recent months as Argentina's Central Bank slows the pace of the peso's decline, known as the moving parity. Although prices rose three percent in July, the peso only lost one percent of its value compared to the US dollar. Economists say the policy is unsustainable and they expect the currency losses to better reflect inflation after the November midterm elections.

Despite the slowdown, inflation kept pace faster than wage growth in the last three months for which data is available. In June, wages rose 2.3 percent in monthly terms, well below price increases, which were 3.2 percent that month, according to data reported earlier this week.

Persistently high inflation has continued at a time when the Fernández government is printing and spending more money ahead of the upcoming elections. The amount of banknotes and coins in circulation is close to two trillion pesos (US$20.6 billion) and has increased by 31 percent compared to a year ago.

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by Patrick Gillespie, Bloomberg

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