Argentine President Alberto Fernández at a performance this week. ESTEBAN COLLAZO (AFP)
Inflation in Argentina is rising like foam. It hit 8.4% in April and 108.8% year-on-year, the highest since the Corralito crisis in 2001. At 104.3%, it had already broken its own record in March and will certainly do so in May, gauging the impact of the run against the peso, which pushed the dollar higher in financial markets at the end of April. The Peronist government has no compass, in the midst of a tough election campaign, with no clear candidates to extend its mandate in October and fragmented in internal struggles. President Alberto Fernández anticipated the data published by INDEC this Friday with a lengthy interview with a related journalist. “Last night [por el jueves] talked about [el ministro de Economía] Sergio (Masa). “We need to set an ultimate goal to stop this. There are many causes that lead to this,” he said. It may already be too late to set a goal. The most optimistic forecasts call for 120% inflation in December, while Massa advocates the International Monetary Fund (IMF) as the antidote to devaluation.
Inflation in April was particularly high for groceries at 10.1%, almost two percentage points above the monthly average. The phenomenon has been repeated since the beginning of the year. A World Bank study released on Thursday ranks Argentina as the second country where food prices have risen the most in the world, behind only Lebanon and ahead of Zimbabwe and Iran.
The data particularly worries the government because it hits the spinal cord of its constituency, the poorest, concentrated mostly in the industrial suburbs of Buenos Aires. Fernández has put management of the economic crisis in Massa’s hands while campaigning for the October Peronist candidate to walk out of the primary scheduled for August. His decision, before giving up the possibility of re-election, upsets Massa, who wants to be selected to represent the ruling party on the ballot, and Kirchnerism, who wants the post of minister. Such is the political noise that Massa himself warned on Thursday that the “Quilombo” is not helping him to stabilize economic indicators. “We’re not getting another quilombo. Politics sometimes delivers a sad spectacle They show their misery and struggles on radio or television, when in reality we are facing the worst debt in history, a pandemic that has changed human behavior, that has forced us to change the health care system, a war that others led, but who changed our prices, ”said Massa. The message is that he does not want to discuss his candidacy with other Peronist rivals.
Fernández, meanwhile, is trying to defuse tensions. That’s why he said he was speaking “with Sergio” about the inflation problem, his government’s main problem. “There are many causes that bring this about,” he said. “One of them is the speculation that there could be a devaluation that the blue dollar [no oficial] go up, the “just in case we gain weight”. It’s what I’ve called self-constructed inflation, psychological inflation.” It’s not the first time the Argentine president has dismissed inflation as a psychological phenomenon, angering government and opposition economists, who for years have questioned the origins of a have not found such trauma.
The crisis, in turn, is fueling the spirit of extreme measures and giving wings to the extreme right. A good example of this is the presidential candidate Javier Milei. As he urges his people to put an end to “the political caste,” he’s gaining traction in the polls by promising to dollarize the economy to magically end inflation. Milei is an economist and loudly defends her proposal in television studios. His critics remind him that with the central bank’s reserves close to zero, a similar measure should be implemented at a peso-dollar parity of around 7,000 pesos, 14 times higher than the current level.
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