Since Argentina continues to experience one of its worst economic crises in decades, the National Institute of Statistics and Census (INDEC) issued its February report on May 15 and showed that Argentina's annual inflation rate was 102.5 percent.
The yearly inflation rate in Argentina exceeded 100%. It hasn't reached triple figures since a period of hyperinflation in 1991, which was more than three decades ago.
Food and drinks were the category of goods most impacted by inflation, which increased by 6.6 percent in February alone. According to INDEC, the 9.8% increase in food prices was due to the high expenses of dairy, meat, and egg goods.
Argentina's inflation rate in the past
The second-largest economy in South America belongs to Argentina. However, its market has been frequently unstable for much of the last century, with a crisis of debt in the 1980s triggering constant hyperinflation throughout that decade. The inflation problem reached its highest peak in 1989, with rates usually climbing to 3,000 percent. Since 2008, the nation has seen inflation of more than 30% annually.
The majority of analysts believe that the nation lacked political will. "It is crucial to comprehend the social aspects of this issue. Sadly, Argentina's lengthy history of inflation has led to generations of people feeling that 30% inflation is normal, according to Adam Fabry, a lecturer in economics at the National University of Chilecito.
The triple-figure inflation will mark a significant landmark for this economy, according to Benjamin Gedan, Project Manager for Argentina and Latin America at the Wilson Research Center. "Although Argentines have become used to considerable inflation, the current rate is merely 20–30%. But the current rate is over 100 dollars, which definitely has a negative impact on Argentines' lives, and their lives will be turned upside down by the current 100%, he claimed.
Argentina, which was struggling with its rising international debt, and the International Monetary Fund (IMF) came to a controversial agreement in 2018 for more than $57 billion in credit, the largest loan package in IMF history.
But since 2018, inflation has steadily increased, making it difficult for the nation to keep up with its payment schedule. The 2018 loan package was replaced in 2022 with a new $44 billion loan agreement with the IMF.
The country's economic targets under the new debt plan were lowered when the IMF and Argentina reached a staff-level agreement, according to the IMF's announcement on May 14. The reason for this agreement is the challenge of an increasingly severe drought in Argentina.
Causes for inflation in Argentina
Argentina's inflation has been boosted by the same factor that has affected the rest of the world. The war in Ukraine, supply chain problems, and a dramatic rise in government spending are all attributable. Many economists contend that the nation itself is accountable for the issue. The nation spends more than it takes in. Public services such as energy, health, and education are either completely free or significantly subsidized. They therefore expanded peso printing to make up for the shortfall.
Sergio Massa, the nation's minister of finance, made a pledge not to ask the central bank to print more money to support public spending by 2022. In order to combat inflation, the Central Bank of Argentina increased the reference interest rate earlier this week to 97%.
The most recent increase in inflation comes as Argentina battles its worst drought in nearly 60 years as well as wildfires in places like the northern Corrientes region. Since May 2022, the nation has been plagued by high temperatures that are thought to be caused by climate change.
Along with the United States and Brazil, the nation is a major exporter of soybeans as well as various agricultural goods like corn, wheat, and other grains.
However, as a result of experiencing crop failure in the Pampas, which is Argentines’ fruitful and fertile grasslands, industry experts have drastically reduced the predicted agricultural production for the nation to levels that haven't occurred since the beginning of the century.
Inflation is all many people have conversations about on the streets. In spite of government initiatives to set prices and restrict grain exports to increase domestic supply, incomes frequently lag behind the cost of goods, which generates Argentines' dissatisfaction and frustration.
Argentinians' lives suffer many struggles due to the high inflation rate in the nation
Due to one of the highest inflation rates in the world, people are feeling the effects of increased costs intensely in Argentina's marketplaces, shops, and homes. Price tags vary constantly from store to store, so Argentines find it difficult to find the daily necessities at prices that aren't exceedingly costly.
Shoppers on the outskirts of the capital, Buenos Aires, told the news agency Reuters that they were dissatisfied with Argentina's financial difficulties and how they affected their standard of living.
“There’s just nothing left. There’s no money. People don’t have anything, so how do they buy?” a 74-year-old retiree told when she was comparing prices of groceries at a market fair outside of Buenos Aires, San Fernando. She confirmed to Reuters that recent food price increases forced her to put off an intended purchase of tomatoes.
Patricia Quiroga, a 50-year-old customer, waited in line to complete her shopping and claimed that 100% inflation was unbearable. She was upset at lawmakers for appearing powerless to stop inflation. “I am tired, tired, just tired of all this, of the politicians who fight while the people die of hunger,” she told Reuters. “This can’t go on anymore.” she told Reuters.
The peso has depreciated so much that people can no longer put enough pocket money in their pockets. It wasn't easy for Rudy to cram enough pesos in his jeans pocket to last the entire day. He complained, "A bunch of money with little value."
"You never go shopping in a single spot. You have to compare five or six grocery stores, going here to get eggs and there to buy laundry detergent. It’s like going on a treasure hunt. But ultimately, you have to buy it because you're not sure if that price range is expensive or cheap, said Guido Mazzei, a 39-year-old Buenos Aires apartment manager.
Life is also not easier for vendors. Every month, the owner of a steel company in the city of Trenque Lauquen, Rudy Rindlisbacher, sits with his son to discuss changing product prices. "It's difficult because it is impossible to predict the product's price before the next importation. Big companies can keep the goods and not put them on the shelves until they know the cost of re-importing them. But small businesses like ours must constantly buy and sell. We need to live," he said.
The poor are the group most impacted by inflation. "They lack unions, engage in unorganized employment, and are unable to bargain over wages. Their earnings evaporate in the blink of an eye due to inflation, according to Gedan.
The purchasing power, savings, economic growth, and the government's chances in the upcoming elections are all negatively impacted by a 102.5% annual rate.