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Argentine August inflation flat
Miserable erratic salaries.

Argentine August inflation flat

Winter garment sales and the end of school holidays had a significant influence in keeping Argentina's retail prices flat during August according to the latest official release from the Census and Statistics Office, Indec. However wholesale prices increased 1,5% for the same month.

The August 0% index means that consumer inflation in the first eight months of 2003 reached 2,5% and even if the Argentine government eventually authorizes public utilities rates to increase, the index for the whole year will be below 6%.

It is estimated that a 10% increase in electricity and gas rates at the most would have a 0,36% impact on the rest of prices.

During August basic food staples actually experienced a 0,2% drop, although overall the food item increased 0,5%. However since the critical month of December 2001 food prices in Argentina ballooned 68,9%. Clothing, footwear and leisure prices experienced a contraction between 1,9 and 2,1% in August.

Reflecting a recovery in the building industry, the construction cost index increased 1,2% for the second consecutive month in August.

Finally Indec points out that 14,3% of Argentine homes (more than 10 million people) remain with basic needs unsatisfied.

Miserable erratic salaries

The real purchasing power of Argentina's workers average monthly salary dropped a dramatic 60% since 1970, according to a paper from the International Labour Organization, ILO and the Argentine Ministry of Labour.

The current average salary now stands at the equivalent of 184 US dollars, but to recover the purchasing power of 1979 should be 461 US dollars.

The highest average ever was in 1975, with 526 US dollars, until June when it crashed following an impressive devaluation of the Argentine currency during the government of the widow of General Peron, Isabel Martínez de Peron.

Under the military dictatorship from 1976 to 1983, real salaries dropped drastically 40%, according to the report, and only began recovering in 1980.

However with the 1981/82 crisis and another fierce devaluation, salaries once again plunged.

With the recovery of democracy in 1983, real salaries began recovering until 1986, when again they deteriorated halving the 1970 average by 1990, mainly because of hyperinflation.

Under liberal president Carlos Menem with the 1991 convertibility system of one peso/one US dollar, salaries started recovering lost ground. But by 1995 with the Tequila crisis plus the prolonged recession triggered in 1998, real salaries and employment collapsed.

Since 2001 and the 2002 devaluation average real salaries dropped a further 25%.

The report finally indicates that in 2002 "salaries stood between 60 and 70% below the 1970 average in a scenario of growing unemployment, with the labour market offering employment in precarious, short lived and unprotected conditions, and no overall safety net".