Jorge Iorio & Walter Bianchi
BUENOS AIRES, (Reuters) – Argentina’s inflation rate jumped to a higher than expected 3.5% in September. This comes after months of declining prices. It is putting pressure on Peronist governments as they try to maintain low prices ahead of November’s key midterm elections.
The median analyst prediction of 2.9% was exceeded by the monthly increase in South American’s consumer price index. It was well over 2.5% for the month before. Inflation in the 12 months was 52.5% and 37% for nine months.
Argentina’s runaway inflation has plagued the country for years. It saps incomes, savings and hinders economic growth. Globally, inflation is increasing.
This reverses the recent downward trend that was based upon the exchange rate anchor, price controls but which did not change things,” stated Isaias Marinas, an Econviews economist. We expect that inflation will accelerate over the next months, to reach 51% by the end of the year.
Prices have been controlled by the government. It had previously imposed a tight limit on the export of beef earlier this year to lower its domestic price. And, it struck this week a deal that will freeze some household goods’ prices for 90 days.
Agustin Echebarne from the Fundacion Libertad y Progreso stated that the government had made a lot of efforts to lower the CPI (consumer-price index). “Nevertheless, inflation continues to hover around 3% monthly.”
Etchebarne said that an “inflationary and devaluation” is possible after the Nov. 14 legislative election, in which the government faces heavy losses.
Battling inflation in Argentina https://graphics.reuters.com/ARGENTINA-INFLATION/qmyvmdzmjpr/chart.png
According to a poll by central banks, analysts have predicted that inflation will be around 48.2% this year. However, the government targets inflation at 33% in next year’s annual budget.
Victor Beker of the Center for Studies of the New Economy, University of Belgrano stated that “the forecast of an annual inflation of 33% (for 2020) seems difficult for us to achieve.”
“A comprehensive anti inflation plan would be needed for 2022, that would coordinate income and exchange policies. However, this is not in the near future.”
Before the official release of data, a Reuters survey of analysts had projected inflation at between 2.7% and 3.4%.
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