Argentina’s inflation is the highest in the world and could worsen in March

Argentina’s inflation of 13.2% in February represented the second monthly fall in the rate despite being the world’s highest, and the trend threatens to break in March, adding to the inflation crisis a jobs crisis.

“Everything is very expensive. I have already switched from the first brand to the second. I have already reduced my expenses to a minimum. The only point I see in work is not to be left with nothing. I work and work, but there is never a salary enough,” he tells Luca Gabriela Morrone, an employee at a bakery in the Villa Urquiza neighborhood of Buenos Aires.

“Sales at the bakery have dropped by half. I see a point when the owner will also cut the number of staff in half,” he predicts.

Political scientist Carlos Fara describes to Lusa the panorama that the Argentine economy and Argentines themselves are experiencing: “Currently, wages lag behind inflation. However, there is an even greater risk: unemployment. We can move from an inflation crisis to a jobs crisis. So, if there is not enough money now, it will be even worse if there is no work. This could cause even greater social unrest, causing much of society to question the government’s economic policies.”

On Tuesday, the Argentine Institute of Statistics and Census announced that the February inflation index was 13.2%, accumulating 276.2% over the past 12 months.

Price growth in the first two months of the year amounted to 36.6%. Since President Javier Miley took office in December, the figure is 72%.

The February figure was below the 15% expected by both the market and the government, but inflation in Argentina remains the highest in the world.

After Argentina in February, the figure was 11.4% in Egypt, 5.4% in Zimbabwe and 4.5% in Turkey. Even Venezuela’s previous inflation record recorded deflation at 0.5%. In Latin America, inflation in all countries was below 01% last month.

Argentina was an exception, but there was a clear decline. In December it was 25.5%, in January – 20.6%.

However, March threatens to break the trend confirmed by February’s 13.2%.

“The big test for the economic policy of the Milai government will be March. It will be critical to know whether this trend will be reversed. In March there will be an even greater increase in tariffs for electricity, gas and water. especially the food was not very good. It appears that it will be difficult to see another significant decline,” said economist Ricardo Delgado.

To avoid breaking the downward trend, the government announced it would open up food imports from the basic basket by cutting taxes, a novelty for a country with an economy closed to imported food.

Among President Javier Miley’s weapons to fight inflation are wage erosion and reforms. The government has avoided wage adjustments, allowing only adjustments well below the rate of inflation, even if it would push the economy into recession.

But despite this strategy, a significant proportion of workers, no matter how busy they are, have fallen into poverty. A sharp drop in consumption must sooner or later lead to job cuts in line with the fall in sales.

“Almost a third of Argentine workers live below the poverty line. The government must ensure that the recession does not deepen and thereby protect employment. Otherwise, a recession may even reduce inflation, but it will not fight the disease with the death of the patient.” “, warns Ricardo Delgado.