A supermarket in Buenos Aires, this week.Juan Ignacio Roncoroni (EFE)
One of the few certainties Argentines have about their economy is that in the middle of each month the National Statistics Institute reports how much purchasing power their salaries have lost. The consumer price index is expected to count the minutes and then all news programs will open. The latest, published this Wednesday, was the highest in three decades: a 12.4% price increase in August alone pushed the index up to 124.4% year-on-year. The next report is scheduled for October 12, ten days before the presidential election. Given the challenge of having the economy minister as a candidate, it is becoming increasingly difficult for the ruling Peronism to deliver bad news. This Friday, the company announced that it would provide weekly inflation data. It will not replace the CPI, which is published every 30 days, but the government hopes weekly monitoring will soften the blow.
“Weekly inflation in decline” was the title chosen by the Economic Policy Secretariat in the tweet announcing its first report. According to estimates from the Ministry of Economy, Argentina recorded weekly inflation of 2.1% between September 4th and 10th. It is the best data in more than a month. Last week, the country recorded a consumer price index almost in line with Spain’s year-on-year, although from a peak of 4.8% in mid-August, similar to one-year inflation in countries such as Mexico and France. “Although the weekly value is still very high, it is now much more in line with the values before the devaluation in August,” explained Economía.
August was a very tough month in Argentina. The ruling Peronism came third in the open primaries on Sunday 13th, with the ultra Javier Milei taking advantage of the discontent and taking first place, and the next day he had to navigate the confusion. This Monday after the election was black: the government devalued the peso by 18%, the central bank implemented a record increase in interest rates by 20 points to up to 118% and the catastrophe was transmitted to prices. The 12.4% rise in inflation in August alone marked the highest price rise in a month since 1991, as the country emerged from the last period of hyperinflation, and a blow to the government candidate, Economy Minister Sergio Massa, who needs to sell some hope to the electorate, who in the primaries favored a radical right that made strong promises of budget adjustment, or didn’t vote at all. In the double-digit range of the August CPI there is frightening data, such as a 15% increase in food and healthcare spending.
As a presidential candidate with his hands at the helm, Massa is restlessly waiting for a comeback. In recent weeks it has announced special bonuses for formal workers and credits for informal workers, a 21% VAT refund for workers who make their purchases with debit cards and raised the income tax floor, leaving it in place to pay many workers. The measures were cannon fodder for the opposition in the week in which the government must present the general budget plans for 2024.
Few things can be more damaging to Peronist presidential aspirations than a poor CPI almost a week before the election. Independent consultants are already forecasting another double-digit index this month, with the country reminding its candidate that it had set a target of stabilizing it at around 4% when he took office at the end of July last year.
The index, which Economía will publish every Friday starting this week, will not replace the National Statistics Institute’s monthly report, and Economic Policy Minister Gabriel Rubinstein has said its figures will be “completely independent” of it. The economic index, released two days after the August consumer price index, expects “weekly inflation records to strengthen and consolidate their downward trend in the next readings.” The government wanted to deliver good news this Friday, but from now on it will measure daily distress with a more detailed index. The CPI has recorded an increase of 80.2% so far this year and more than 40% of the population is affected by poverty.