MercoPress. South Atlantic News Agency

Argentina displaces Venezuela as holder of the region’s highest inflation title

Cristina Fernandez administration can boast the highest inflation rate in the continent

Venezuela’s president Hugo Chavez running for re-election received a considerable boost for his campaign from his peer and political associate President Cristina Fernandez when it was revealed that Argentine inflation in the first half was over two digits.

This is clearly above Venezuela’s 7.5% for the six months and its declining tendency for the last seven months as the government stepped up imports as part of a plan to expand public spending ahead of elections in October, reports La Nacion from Buenos Aires.

With little more than three months for the presidential elections Hugo Chavez can boast that Venezuela no longer holds the title of having the highest inflation in South America.

However “it is of little comfort for Argentine consumers that there are countries in a worst situation such as Byelorussia and Ethiopia, which have annual inflation above 30%” argues La Nacion.

Faced with the toughest elections since his almost fourteen years in office, Chavez implemented an anti inflationary program based on measures to increase the supply of food and consumer goods.

This clearly contrasts with the Argentine scenario where the failure to control prices with a program under the helm of Domestic Commerce Secretary Guillermo Moreno and the soaring value of the US dollar, the only anchor which attempts to contain a bit prices is the abrupt slowing down of the Argentine economy.

“Almost without exception private analysts point out that in spite of a deceleration in the cost of living during June, in the first half of 2012, inflation is estimated at a floor of 10.5% and 11% with an annual forecast consolidating above 22%”.

But Argentina and Venezuela are the exceptions in a regional context of inflation under control. Brazil’s referential consumer prices index ended June with an almost unchanged 0.08%, which means that in the last twelve months inflation was below 5% compared to 6.5% in 2011.

The situation is not different in Bolivia, Chile, Peru, Ecuador and Colombia which in the first six months of the year have inflation in the range of 2%. Meanwhile in landlocked Paraguay, in June consumer prices were down 0.4%.

Even in Uruguay which has a long tradition of relatively high inflation, measures implemented seem to be working and June reported an increase of 0.3% in consumer prices. In the first six months inflation was 4.3% and 8% in the last twelve months, but converging to the upper target of 6%.