The annual inflation rate in Argentina surged more than analysts expected, remaining at the highest level since 1991 and marking a perilous milestone for this Latin American economy
Argentina’s state-run INDEC statistics agency said that the inflation rose 108.8% year-on-year in April 2023, the third month in a row since the inflation growth surpassed 100% for the first time in three decades.
The national inflation rate averaged 3.11% within 2014 – 2023, yet it started growing enormously this year to reach an all-time high of 8.40% in April.
The rate accelerated more than expected by economists, continuing the trend of 100+% YoY growth, first registered in February. Compared to a month ago, prices rose 8.4% in April, well above economists’ forecasts of 7.5%.
On a monthly basis, all the consumer prices except for alcoholic beverages rose over 5%. Food prices jumped most – surging 10.1% since March. At present, Argentina is second in a World Bank ranking of countries with the highest food inflation.
At least four in 10 Argentine citizens, and 54% of children under 15, are poor, according to the INDEC. Many of them rely on the soup kitchens to get some daily food.
Back in March, the peso suffered a sharp 13% selloff in parallel markets. Argentine consumers rushed to withdraw over $1 billion of dollar deposits or 6.7% of the total savings stored within the national banking system last month. The peso volatility was one of the main factors fuelling additional price hikes during April.
Besides, Argentina has a long record of record inflation levels, which were initially triggered by the rapid expansion of the money supply serving the needs of the government. The country has been going through repeated cycles of hyperinflation followed by attempts at stabilisation for decades.
Now, the economic outlook for the Latin American country is rapidly worsening. Reportedly, the country’s officials aim to renegotiate Argentina’s $44 billion program with the International Monetary Fund. However, the possibility of IMF approval is vague since the government currently isn’t complying with some key program targets.
Considering the situation, economists expect a steep recession this year due to continuously rising prices and a historic drought that’s diminishing the crop exports. The economy is forecast to contract 3.1% this year, according to the central bank’s latest monthly survey.