Argentina inflation hits 124% as cost-of-living crisis sharpens

Customers line up to buy produce in a market as inflation in Argentina hits its highest level in years, causing food prices to spiral, in Buenos Aires, Argentina April 12, 2022. REUTERS/Mariana Nedelcu

BUENOS AIRES  –Argentina‘s annual inflation rate shot up to 124.4 percent in August and hit its highest level since 1991, stoking a painful cost-of-living crisis in the South American country.

The soaring prices, which rose more than expected, are forcing hard-hit shoppers to run a daily gauntlet to find deals and cheaper options as price hikes leave big differences from one shop to the next, with scattered discounts to lure shoppers.

The August monthly inflation reading of 12.4 percent – a figure that would be eye-watering even as an annual figure in most countries worldwide – is pushing poverty levels past 40 percent and stoking anger at the traditional political elite ahead of October elections.

“It’s so hard. Each day things costs a little more, it’s like always racing against the clock, searching and searching,” said Laura Celiz as she shopped for groceries in Tapiales on the outskirts of Buenos Aires. “You buy whatever is cheaper in one place and go to the next place and buy something else.”

Her husband, Fernando Cabrera, 59, was doing sums on a calculator to compare fruit and vegetable prices.

“In this way we try to beat inflation or at least compete with it a little,” he added.

A central bank analyst poll, released after the data, forecast inflation would end the year above 169 percent, a sharp hike from its estimate a month earlier of 141 percent. It predicted monthly inflation of 12 percent in September and 9.1 percent in October.

Argentina is caught in a cycle of economic crises, with a major loss of confidence in the peso driving steady depreciation, triple-digit inflation, negative central bank reserves and a flagging economy due to drought hitting farming.

READ: Argentina posts weakest growth since 2020 as drought hits farm sector

The country is also battling to salvage a $44-billion deal with the International Monetary Fund (IMF) and facing the prospect of a $16 billion legal bill after a U.S. court ruling related to the state takeover of energy firm YPF a decade ago.

READ: Argentina to use IMF money to repay part of currency swap with China -sources

‘People are angry’

That’s playing into a race towards presidential elections next month, with radical libertarian Javier Milei the shock frontrunner ahead of establishment candidates economy minister Sergio Massa and conservative Patricia Bullrich.

And inflation itself could still get worse amid the election uncertainty, which has revived memories of hyperinflation from the 1980s among those who lived through it.

“Some estimate say it could accelerate to 180 percent, which is why we are talking about record inflation levels,” said local economic analyst Damian Di Pace, adding that other nations in the region were meanwhile seeing inflation cool.

“While the rest of the Latin American countries have single-digit inflation, Argentina is already in triple-digits.”

Massa, who has cut taxes to alleviate the impact of inflation on workers, said late on Wednesday that August had been the “hardest” month, pointing the finger at the IMF.

“The 20 percent devaluation of the currency, imposed by the IMF, we knew it was going to hit the pockets of all Argentine families,” he said.

READ:  Argentina devalues peso, raises rates after shock primary vote

Business owners, who themselves face a tricky cycle of wholesale prices rising before they’ve shipped merchandise and been able to restock, are also suffering from product shortages due to the uncertainty of inflation.

Butcher Marcelo Capobianco, 53, fears having to close his business and is considering emigrating overseas. He displays meat prices in dollars, the currency that many use as a refuge from the constant devaluation of the peso.

“It’s dramatic. We don’t know how we’re going to pay the rent this month, how we’re going to pay the electricity,” Capobianco said at his butcher shop in Olivos, on the outskirts of Buenos Aires. “People are angry and have every right to be because they can’t afford to buy a kilo of meat.”

“We are already thinking about what we are going to do because, in reality, if this continues, I think we are going to have to shut up shop,” he said.