Haven’t seen the worst in terms of inflation yet? That is the great unknown that arises after February marked a monthly CPI of 6.6%, indicating an interannual rate of 102.5%. We are going through the highest year-on-year level since October 1991, after the outbreak of hyperinflation. The price variation we are going through is the highest in the century. Yes, of the century.
What to expect in the coming months? The same inertia and indexation of the economy generates serious problems to stop this evil that plagues our country.
Variables that adjust for past inflation, zero expectations about a possible improvement in current conditions, completely distorted relative pricesCentral Bank with low availability of dollars and draining reserves dailythe drought that threatens the current income and, above all, the future of currencies, makes us think that each time we are further away from that inflation than the minister Sergio Massa set the target for April, starting with “3,…%”.
On the contrary, what is proposed is a scenario where one glimpses Low probability to see in the short term inflations that remain on average below 5.5%/6%if one thinks strictly of:
- And Banco Central whose intervention in the secondary market has been aimed at finance Treasury tendersand that it will probably continue to do so in the future with regard to the maturities that did not enter into the exchange this month.
- a possible reissue of “Dollar Soja”.
- The law of pension moratorium.
- Loss of tax collection because of the drought
Added to this, in months like April and May the demand for money usually falls, generating greater inflationary pressures.
Vitelli predicts that the assistance from the BCRA to finance the Treasury, combined with the drain on reserves, will exacerbate inflation
In the search for culprits we will find the most diverse actors in the discourse: the business sector that continuously raises prices, the Ukraine-Russia war, the departure of Minister Martín Guzmán, the tourists who in January demanded a lot of hotels and restaurants… And maybe due to inflation in February blame increases in meat (although the strong delay in real terms that it had during 2022 is not mentioned).
There will always be a “parsley”, but the truth is that until now no recipe could stop the incessant inflation.
Each government administration, with more inflation than the previous one
The deterioration of the purchasing power of the currency was atrocious, where unfortunately we have become accustomed to living in constant acceleration, the transit of which generates vertigo and “staying still” is no longer an option because it is becoming more and more expensive.
The purchasing power of the peso erodes every day. Only in February, the purchasing power of the currency lost 6.2% and in 2023, 11.5%. In other words, both cash and non-remunerated sight deposits (liabilities) finance the State, whose deficit is covered with a monetary issue, together with the issue that the differential exchange rates entail -in pursuit of NO exchange honesty-, to which is added the issue for the purchase of securities in the secondary market to sustain parities and intervene in the financial dollars, etc.
The old saying “Evil for many, consolation for fools” refers to the fact that, in truth, a misfortune is not more bearable just because others are in the same situation, do you agree?
To elucidate this unknown, I will focus on hard data and providing some perspective. For the same moment of time of each management since Nestor Kirchner From now on, the graph is not very encouraging and shows the following results:
Accumulated inflation in each presidential term. Source: Salvador Vitelle based on INDEC and IPC San Luis
In the same month of each administration, the inflation that each presidency had/was accumulated, ordered in ranking (where the prize does not exactly go to the first), is:
- Alberto Fernandez: 368%.
- Mauricio Macri: 172%.
- Cristina Fernandez de Kirchner (second management): 138%.
- Cristina Fernandez de Kirchner (first management): 87%.
- Nestor Kirchner: 27%.
It is striking that it is arranged in the same way in which the different efforts took place, each presidency with higher inflation than the previous one, ¿ o no?.
The persistence of structural imbalances, such as the chronic fiscal deficit, is at the base of growing inflation, says Vitelli
a final thought
Do not underestimate, without a doubt inflation is a great adversary; It has put more than one presidency in check. Eradicating it is and will be one of the challenges to be met for the coming months and years. It is unlikely that we will find a successful management that fails to “take the bull by the horns.”
He chronic fiscal deficit to which Argentina has submitted, financed mainly with issuance, has done nothing but finance the treasury at the expense of the population with less purchasing power. It is the most corrosive “tax” in recent years, which has not even been submitted for discussion by parliament and/or the popular will.
Meanwhile, the middle class is in extinction with little savings capacity, where the dreams of owning a home, and many others, are increasingly distant.
