Argentina’s already high inflation continued its upward spiral in December 2022, officially hitting 211.4% for the full year according to new data from the National Institute of Statistics and Censuses (INDEC). This marks the highest annual inflation rate since 1990 and cements Argentina’s position as having one of the world’s most unstable economies.
Monthly Inflation Jumps to Nearly 10%
The country’s consumer price index rose by 9.8% in December alone – the fastest pace in over three decades. This caps off a year of steadily mounting inflation triggered by currency devaluation, rising commodity prices, and subsidy cuts enacted by the government.
Some experts believe the true rate could be even higher than the official number. Prices for basic necessities like food and housing have skyrocketed, leaving many Argentinian families struggling to afford basic needs.
Worst Economic Crisis Since 2001 Default
Analysts say Argentina is experiencing its worst economic crisis since its massive debt default in 2001. The currency has drastically weakened, poverty and unemployment have increased, and faith in the government’s economic management is eroding.
Newly elected President Javier Milei rose to power on promises of reigning in inflation with fiscally conservative policies. However, his drastic budget cuts and loosening of price controls have so far failed to stabilize the economy. Milei maintains his “shock therapy” policies require more time before bearing fruit.
“We have difficult times ahead, but there is light at the end of this,” said President Milei in a televised address. “With discipline and determination, we will restore economic order in Argentina.”
Meanwhile the population grows increasingly frustrated, with mass protests erupting in response to rising costs. Stores have begun rationing goods as suppliers hold back shipments waiting for prices to stabilize.
Surpassing Venezuela’s Crisis Levels
Argentina has now surpassed Venezuela in having the highest inflation rate in Latin America. Venezuela’s annual rate for 2022 stood at 100%, down from a peak of over 1 million percent several years ago during the height of its economic meltdown.
While Venezuela struggles with political dysfunction after years of authoritarian policies, analysts say Argentina’s woes stem more from long-standing issues like unstable currency markets, fiscal mismanagement, and corruption. Resolving these will require deft political maneuvering and unified, consistent policies over time – neither of which Milei’s young administration has shown much capacity for so far. The coming year will test their abilities as inflation could accelerate even faster without prudent management.
Bracing for More Hardship in 2024
Economists broadly expect prices to keep rising rapidly in 2024 as inertia from last year’s commodity price spikes continues filtering through supply chains. The government shows no signs of reversing course on its austerity-focused agenda either.
Key factors that could driver higher inflation include:
- Energy subsidy cuts: Further utility rate hikes are planned for 2024 as Argentina reduces subsidies.
- Currency instability: Ongoing peso weakness stokes imported inflation.
- Wage-price spiral: Indexed salaries and strong wage negotiation power among unions helps push prices higher.
- Global conditions: Recession risks around the world weighing on exports and fiscal accounts.
Argentinians are bracing for the hardest times yet over the coming year. Juggling multiple jobs and borrowing money will become necessary for many just to survive week to week. Tragically, more people losing homes and going hungry is almost inevitable if inflation is not reined in sharply in 2023.
Food Prices Up Over 200%
Perhaps the most painfully visible impact of Argentina’s inflationary spiral can be seen in grocery stores and markets.
The latest INDEC data shows food and non-alcoholic beverage prices rose 252.1% over 2022. Some staple products like bread, beef, vegetables, fruits and dairy saw even larger cumulative increases upwards of 300%.
|Bread and Cereals
|Oils and Fats
This makes basic subsistence prohibitively expensive for low and middle income families without government assistance. Food costs alone can quickly erase entire paychecks, forcing impossible tradeoffs with rents, utilities, healthcare and other essential expenses.
NGOs are ramping up food bank efforts but cannot keep pace as more Argentinians fall into poverty with each passing month. Heartbreaking stories abound of parents skipping meals so their children can eat and elderly unable to afford medicine.
Sadly no relief appears imminent in 2023 if the government stays its current policy course. Argentinians can only hope the social fabric holds together long enough for stability to finally return.
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