Retail prices in Argentina had a jump of 4.9% in November marked by price controls and financial repression. An increase of 85.3% was accumulated since the month of January, and year-on-year inflation reached the most extreme levels since October 1991.
The INDEC confirmed that the Consumer Price Index (CPI) had an official increase of 4.9% in November, compared to the price level of the previous month. “Seasonal” prices rose 4.1% in the month, the core CPI rose 4.8% (eliminating the effect of energy and food), and state-regulated prices rose 6.2 %.
The heading of housing, water, electricity, gas and other fuels was the one that registered the greatest increase in the month (8.7%), followed by telecommunications bills (6.4%), alcoholic beverages and tobacco (6.3%), transportation rates (6.1%) and restaurants & hotels (5.4%), among other above-average items.
The month was marked by the intensification of price controls and the financial repression of the exchange market, measures whose effects are only temporary and hide a kind of “repressed inflation” that sooner or later will end up being revealed.
But even despite the data collected for a particular month, according to INDEC’s own records, inflation averaged 6.36% per month between July and November, while the average for the preceding 5 months reached 5.56%.
Likewise, the average monthly inflation for the first 11 months of 2022 was 5.77% and the same period but in 2021 shows an average of 3.45%. Beyond the short-term results, the inflationary acceleration is evident even in the light of official statistics.
Year-on-year inflation climbed to 92.4% at the end of November, the most extreme value recorded since October 1991. This constitutes the most dangerous trend regarding the dynamics of prices in Argentina, far from experiencing a relevant deceleration.
There was a rise of 21.4 percentage points over the year-on-year variation in retail prices since Sergio Massa took over the Economy portfolio. So far during the Alberto Fernández administration, year-on-year inflation increased 38.6 percentage points over the 53.8% left by the Macri administration, a figure that by itself was already too high compared to stable and normal economies.
The consequences of fiscal irresponsibility and the lack of control of the money supply continue to be manifested through the general level of prices. The tourniquet applied by the Massa administration with price controls and financial repression managed to buy time in exchange for causing recessive effects on economic activity.
The EMAE activity index fell 0.3% in September, and most private consultancies estimate that the country has already entered a recession and that it will deepen in 2023. This is due to the repression of the exchange market and foreign trade, postponing a devaluation that could further unbalance the increase in prices.
With information from La Derecha Diario