The Kirchner government is increasingly cornered by reality. The director of INDEC, the economist Marco Lavagna, confirmed that the institution revealed a monthly increase of 7% over the average of retail prices for the first half of January.
This is the accumulated variation between the first fifteen days of December 2022 and the same period for the first month of the current year.
For the Casa Rosada, this preliminary report caused a panic situation and set off all the alarms.
Economy Minister Sergio Massa secretly accessed the report before it was released to the public Monday night, and quickly announced a foreign debt buyback program to reassure markets and intervene in legal shadow dollars.
The resolution forces the Central Bank to use reserves to purchase the redeemed securities on behalf of the Treasury, and with the approval of the Monetary Fund after the outbreak of the currency run.
If the variation persists by the end of the month, the 4% monthly inflation target for the first quarter could be completely overshadowed, the Massa Plan would collapse and inflationary expectations would once again overflow as they did in July of last year.
The “agreement” on prices with businessmen, the rate controls and the launch of the Fair Prices program, as well as the control by parapolice groups of trade unionists, were measures that proved to be completely useless when it came to addressing inflationary dynamics.
In this context, the parallel dollar reached its all-time high of $378 on Tuesday, the exchange gap operates at levels close to 95% with respect to the official exchange rate, and strong pressure is generated for the outflow of international reserves from the Central Bank to finance foreign trade transactions.
If the Government decided to deepen price controls on an inflationary outbreak of the characteristics suggested by INDEC, the shortage of goods in shelves would undoubtedly mean a natural ceiling for the effectiveness of the measures.
Massa’s team is left without tools to operate within the heterodoxy of the economy.
In fact, only in the first month of launching Fair Prices, the Government recognized shortages of up to 25% on the goods covered by the regulations.
The initiative was deployed on November 11 of last year, and monthly inflation only fell one percentage point compared to October.
Without further consolidation of public finances (greater than the IMF’s tenuous demand) and without better control of the money supply, the economy runs the risk of repeating the episode of instability that was observed in the middle of last year.
With information from La Derecha Diario