The poverty rate in Argentina rose from 36.5% last year to 40.1% in the first half of this year.
This increase adds an estimated 1.7 million people to the nation’s poor. The data comes from the National Institute of Statistics and Census (Indec).
They plan to release finalized numbers next week.
Martin Rozada, the report’s lead, says the rate could range from 40% to 43%. These numbers cover 31 urban areas, housing 29 million people.
If applied to all 46.2 million Argentinians, almost 18.5 million would be poor.
In the first half of 2023, 62.4% of Argentinians earned some income. The average income for the second quarter was around $395.
August saw a sharp inflation spike, hitting 124.4% annually. This marks an 11-point rise from 113.4% in July.
The monthly rate in August was 12.4%, the highest in 21 years. The food and health sectors led the hike, increasing 15.6% and 15.3% respectively.
Alcohol and tobacco saw the smallest rise at 8.5%.
To combat this, Argentina’s Central Bank raised its key interest rate. It went up by 21 points, from 97% to 118% in August.
Background
The surge in poverty and inflation in Argentina paints a grim economic picture. First, it signals a serious systemic issue.
Evidently, standard economic measures aren’t sufficient. High inflation rates strain ordinary households, especially in essentials like food and healthcare.
It traps them in a vicious cycle of poverty.
The Central Bank’s interest rate hike aims to curb inflation. However, this is a double-edged sword. Higher interest rates can cool down the economy.
Yet, they can also make borrowing costlier for businesses and individuals. This could stifle economic growth and job creation.
Lastly, the increase in poverty poses social and political challenges. More impoverished citizens could lead to higher crime rates and social unrest.
It may also put pressure on the government to implement urgent reforms. However, these quick fixes may not address the root causes.
Thus, a comprehensive, long-term strategy is crucial for Argentina’s economic health.