Inflation in Argentina reaches 254% in 12 months, with slowdown in January

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Index slowed to 20.6% in January, down from 25.5% in December. Economy Minister Luis Caputo predicted that inflation will be lower in February and March. Javier Milei waves during an event in Buenos Aires on December 12, 2023 JUAN MABROMATA / AFP Inflation in Argentina reached a rate of 254.2% in 12 months, according to the official statistics institute, Indec. This is one of the highest interannual variations in the world. In January, the indicator slowed to 20.6% in January, below the 25.5% in December. The January consumer price index coincided with previous estimates made by the government of the ultra-liberal Javier Milei, around 20%, in a context of “stagflation” — economic stagnation with inflation — announced by the president himself shortly after taking office. After the 50% devaluation of the peso in December, the release of almost all prices in the economy and the first adjustments to transport and public service tariffs, monthly inflation remains close to the historical record of February 1991 (27%). Among the sectors with the biggest increases in January are goods and services (44.4%), transportation (26.3%), communication (25.1%) and food and non-alcoholic beverages (20.4%). ‘Little to celebrate’ “There is little to celebrate with inflation at these levels, especially since in December salaries rose by less than 9% and in January closer to 15%, but also below inflation”, summarized economist Hernán Letcher to AFP . The government began its administration with inflation of 25.5% in December, taking last year’s inflation to 211.4%. “With what we are doing in fiscal, monetary and exchange rate matters, we are reducing the inflation rate. [inflação] wholesale is already plummeting”, said Milei during his recent trip to Israel and Italy. According to Indec, a kilo of bread cost 1,214 pesos in the country (1.3 dollars, 6.46 reais), a liter of milk 842 pesos ( US$ 0.95, R$ 4.72), a kilo of sugar 1,180 pesos (US$ 1.47, R$ 7.30), sunflower oil (1.5 liters) 2,630 pesos (US$ 2, 98, R$ 14.8) and ground meat starting at 3,469 pesos (US$ 3.93, R$ 19.53). “Some things I ate before, now I don’t eat anymore, like cheese and meat”, Elsa González, a 74-year-old retiree, told AFP. On average, the healthcare sector recorded a monthly increase of 20.55%. “With daily medication, now I have to take half the pill or less than I did before because of the price”, reported Ramón Zamudio, 70 years old, a caretaker of a building in the center of Buenos Aires. Economy Minister Luis Caputo predicted that inflation will be lower in February and March. “It is already decreasing” , he stated. Milei suffers a major defeat after failing to approve legislative changes in Argentina Basic food basket In its two months in office, the government launched an ambitious deregulation of the economy, seeking to reduce the role of the State to a minimum, lower inflation and achieve stability. Milei issued a mega decree with changes to norms and laws, including a labor chapter whose application was temporarily suspended by the courts. At the same time, he sent a “Bus Law” with more than 600 articles which, after intense debates with allies and opponents, ended up failing in Congress. Caputo stated that he will adopt other executive measures to achieve the “zero deficit” goal committed to the International Monetary Fund (IMF) this year by reactivating a US$44 billion (R$218.75 billion) credit program. The CGT, the country’s main trade union federation, organized a 12-hour general strike in January and announced that it will ask for an 85% increase in the minimum wage, currently 158,000 pesos (US$179.5, R$892). This Wednesday, Indec set the basic food basket at 285,561 pesos (US$324.5, R$1,613) and the total basic food basket at 596,823 pesos (US$674.7, R$3,354).

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